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Prepaid Phones

This is a method of billing for a mobile phone. Prepaid mobile phones operate by a user’s purchase of mobile services in advance of using them. By purchasing credit to use on a mobile phone network, a user can access a mobile phone network without ongoing billing. more...

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Users can then use the mobile phone to the limit of their credit.

The alternative billing method (and what of is commonly referred to as a mobile phone contract) is post-paid mobile phones, where a user enters into a long term billing arrangement with a carriage service provider (CSP). The user in this situation is billed according to the use of mobile services at the end of each month. Theoretically, a user in this situation has no limit on use of mobile services and, as a consequence, unlimited credit. While most often a set amount is billed each month, it is possible for a user to be billed for any amount in this open ended arrangement.

Pre-paid mobile phones services are also known as "Pay as you go" or "Prepaid Wireless services". A user can add more credit to the pre-paid account at any time. However most credit for a prepaid mobile phone has a time limit. Either users needs to add more credit by a given time or lose their remaining balance.

History

First US Patent on prepaid mobile phone

The Original Inventor and provider of prepaid mobile phone was Banana Cellular a.k.a Banana Communications, founder Andrew Wise in 1993, which covered the provisioning of prepaid wireless services. Banana first sold prepaid mobile phone services in April 1993 in a small office located at 637 N. 3rd Ave, Phoenix, Arizona. Customers were able to connect any other mobile phone on the prepaid network. Patent Number 5826185 Filed November 16th, 1994.

Hairpin Solution

The main issue that kept early prepaid models from becoming a csp's primary product offering was that the underlying products were "hairpin solutions" meaning that it took 2 extra dedicated trunks on the cellular switch to make one call, one for the inbound connection to the telephony platform and the second back to the switch to complete the call. Trunks were an expensive resource in a large metropolitan Mobile Telephone Exchange and switching equipment did not have the capacity that it has today, so prepaid was relegated to being the second choice for most US carriers..

SS7 Signalling

Current prepaid mobile phone solutions rely on out-of-band signalling (typically SS7) to set up the call. This happened after international standards for handling prepaid call types were developed.