Remember my friend I was talking about in the last post?  I mentioned something about his phone bill being in the thousands when he was still here in the US.  It was so bad that he even reached the point wherein he had to have his phone service cut off for a time.  Now that is what we call bad debt.

I am sure that my friend is not alone.  There are probably countless individuals out there who have had the same experience with conventional telecommunications providers.  At one point or another, they have to cut their phone service because of bad debt or they have to cut back on their activities.

With the VOIP industry becoming more and more pervasive today, however, bad debt with regard to telephone charges is becoming less.  How so?  Aside from the fact that VOIP allows for far cheaper calls, the industry also has a different scheme from conventional telecommunications operators.  The norm in the VOIP industry is that customers can access their VOIP accounts and make phone calls via pre-paid plans.  Customers can normally buy pre-paid credits and then go about with their own business.  The account remains active while there is still credit in the account.  Each phone call eats up the credits.  Once the account credit hits zero, the customer cannot make phone calls anymore.  He or she would have to purchase another set of credits in order to continue using his VOIP account.

Simple, isn’t it?  And yet, it is a very effective way to control debt that may arise from too much activity on the phones.  This is how the VOIP industry is helping eliminate bad debt.

On the other hand, conventional telecommunications companies normally offer plans which are post-paid.  That simply means that a customer can simply make all the phone calls that he or she wants and just pay when the bill comes around.  This could be convenient in a way, since your service will not be cut off (unless you have not paid for a certain period of time).  This practice, however, provides an easy way to get into debt.  To be fair, some telecoms offer pre-paid service now.  This also contributes to controlling customers’ spending on phone calls.  However, the fact remains that VOIP calls still cost a mere fraction of conventional phone calls, especially if we are talking about long distance and overseas calls.

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