Muentel

Though the usage of telephones has increased drastically in the last few years, especially with the introduction of low cost cellphones, many telecom companies  (or telcos) do not make much profit. This is because the margins in this industry are poor due to low average revenue per user and high advertising and distribution overheads.

One way a telecom company can improve their margins is by using their network of subscribers to cross sell other products. A single telephone by itself is not of much use, since the person owning the phone cannot call anyone else. As the number of people increases, the value of the network increases exponentially, as its use becomes widespread.

A new customer brings 3 benefits to a company - pays the company a fee, he is aware of the products and features offered and increases the reach of the company. Many cellular networks and telecom companies offer features which are free to regular subscribers of their product, but users of competitors services have to pay a fee.