This scheme is a short term exploitation of a delay in regulation catching up with decreased costs of terminating calls. As soon as TRAI lowers termination to around 10-20 paisa, Virgin will find another stunt.

Findings from the Teleuse@BOP2 (http://lirneasia.net/projects/2006-07/bop-teleuse/) study revealed that over 30% of all telecom owners at the BOP made and/or received missed calls.

If operators begin paying their customers for the incoming calls they receive, this creates a greater incentive for users to receive calls than they are to make them. As such, one such way that users could communicate to the other party that they wish to speak to them (and directly or indirectly, would like them to call back) at no cost, is through missed calls which can be used to communicate a variety a messages, one such being “Call me back”.

The extent of increase in the use of missed calls, however, would depend on several factors such as the relative benefit a user enjoys from received calls, as opposed to the cost incurred to make one, etc. Furthermore, such a phenomenon could arguably create a disincentive for operators to pay customers for incoming calls received.

At the end of the day, I guess the potential long-term impact such a tariff scheme could have on a user’s demand for missed calls ultimately depends on how responsive the regulator (in this case, TRAI) is to the change in tariff structure, as well as the extent to which an SMP operator is allowed to exercise its power on the rates at which termination charges are set at.

The termination rates were set by TRAI. They are too high. They will be lowered. This is a temporary phenomenon that will disappear when that happens. I do not think Chanuka was exaggerating.

I guess the point you try to make is the market itself will take care of this ‘marketing gimmick’.

Still I think it is enough reason for the regulator to be concerned. As we all know there are no perfect markets in the world. If there are perfect markets we don’t need the regulators in the first place.

Agreed, the receivers will also not accumulate significant credits, as you rightly point out, but the perception (see the ad) per se can still increase the outgoing calls at public sector departments. So it is surely a concern for the government (which TRAI and DoT are part of). Think that might be the reason they react.

We highlighted the story to discuss the externalities and surely not to praise Virgin Mobile. But of course, I was once a journalist and old habits die hard.

2. what is ‘due’ and ‘undue’ profit?

3. lets assume that bureaubrat calls son for entire working day, 8 hours, how much can she generate?

4. can one expect marketing gimmicks from a MVNO?

5. how ‘inovative’ is a practice that has been around for 7 years at least?

LIRNEasia should know better than the media to sensationalize.

Here it is:

http://www.youtube.com/watch?v=Hi7r54TBf-A