The basic concept of cellular phones originated in 1947 in the US, when researchers at Bell Laboratories got the idea of cellular communications from the mobile car phone technology used by the police department of the country. However, it took over three decades for the first cellular communication system to evolve. The public trials of the first cellular system began in Chicago during the late 1970s and the first commercial cellular telephone system was launched in Tokyo. The cellular telephone services were introduced in the US in the early 1980s, and gained popularity in a short span of time. By the late 1980s, cellular services had become popular in many developed countries across the world. Over the years, on account of dynamic technological advancements in the sector there was an improvement in the number and quality of services provided.

There were mainly, two types of cellular services offered by operators – post-paid and prepaid:

• Post paid cellular services, also called billing card services, required the customers to pay for the cellular services utilized by them at the end of a specific period (generally, every month). These services also included fixed rental charges for the services provided. Post-paid cards were just like telephone bills and electricity bills, which have to be paid at regular intervals.

• Prepaid cellular services required the customers to pay in advance for the services they were to use. These cards were available in different denominations, and the customer could choose one keeping in mind his/her call requirements and budget. The services were withdrawn when the customers exhausted the call time they were entitled to.

Pre-paid cellular services drastically increased cellular penetration across the world, redefined the subscriber segments and operator market shares, and resulted in the creation of new sales channels and service processes. As per a report on www.cellphones.about.com, the pre-paid cellular user base was drastically increasing across the world in the early 21st century. In Europe, more than 57% of cellular users were reportedly planning to shift to prepaid card services, while in Canada, the prepaid subscriber base was posting double growth rate as compared to post-paid services.

In Japan, China and Singapore, the pre-paid segment grew at a considerable pace in 2002. In the US, though the prepaid cellular market amounted to only 10% of the total cellular market, the number of subscribers opting for pre-paid card services increased significantly during the early 2000s.

The reasons for the above were not difficult to understand – pre-paid cellular services were much cheaper compared to post-paid services as there was no monthly rentals involved. Unlike the post-paid services, where the user was required to pay for the services used (plus rental charges) at the end of every month, pre-paid services require users to prepay for the airtime chosen. Pre-paid cards eliminated the risk of exceeding the spending limits as the card ‘expired'on completion of the air time allotted.

Apart from these, prepaid cards offered other benefits like increased convenience due to elimination of credit checks/security checks/real identity disclosures/ security deposits and signing contracts. However, few disadvantages were also associated with pre-paid cards. Pre-paid cards proved expensive on a per minute basis. In general, a minute cost doubles in case of a pre-paid service as against a post-paid service. Moreover, the range of services offered in a post-paid cellular connection was generally more as compared to pre-paid card services. Value added services were charged at a higher price for pre-paid card owners.

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