What is the business model of the service providers?

When cellular telecoms services were launched, phones and calls were very expensive and early mobile operators (carriers) decided to charge for all air time consumed by the mobile phone user. This resulted in the concept of charging callers for outbound calls and also for receiving calls. As mobile phone call charges diminished and phone adoption rates skyrocketed, more modern operators decided not to charge for incoming calls. Thus some markets have "Receiving Party Pays" models (also known as "Mobile Party Pays"), in which both outbound and received calls are charged, and other markets have "Calling Party Pays" models, by which only making calls produces costs, and receiving calls is free. An exception to this are international roaming tariffs, by which receiving calls are normally also charged.

The European market adopted a "Calling Party Pays" model throughout the GSM environment and soon various other GSM markets also started to emulate this model. As Receiving Party Pays systems have the undesired effect of phone owners keeping their phones turned off to avoid receiving unwanted calls, the total voice usage rates (and profits) in Calling Party Pays countries outperform those in Receiving Party Pays countries. Consequently, most countries previously with Receiving Party Pays models have either abandoned them or employed alternative marketing methods, such as massive voice call buckets, to avoid the problem of phone users keeping phones turned off.

In most countries today, the person receiving a mobile phone call pays nothing. However, in Hong Kong, Canada, and the United States, one can be charged per minute, for incoming as well as outgoing calls. In the United States and Canada, a few carriers are beginning to offer unlimited received phone calls. For the Chinese mainland, it was reported that both of its two operators will adopt the caller-pays approach as early as January 2007.

While some systems of payment are 'pay-as-you-go' where conversation time is purchased and added to a phone unit via an Internet account or in shops or ATMs, other systems are more traditional ones where bills are paid by regular intervals. Pay as you go (also known as "pre-pay") accounts were invented simultaneously in Portugal and Italy and today form more than half of all mobile phone subscriptions. USA, Canada, Costa Rica, Japan and Finland are among the rare countries left where most phones are still contract-based.

Source: http://en.wikipedia.org/wiki/Mobile_phone

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