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Thursday, October 1, 2009

Termination rates are already falling - so why all the fuss?

Mark Bridge writes:

With over 100,000 people having signed its petition in four months, there’s no denying that the Terminate The Rate campaign is attracting supporters. And with promises including “BT and 3 are working together on a petition that will lower your phone bill by reducing the level of Mobile Termination Rates”, it’s easy to see why.

But what’s the point of all the campaigning - and has it really achieved anything?  Terminate The Rate – which is run by 3 UK – says mobile networks charge a Mobile Termination Rate (MTR) of around 4.7p per minute for connecting a call to another network. That’s a lot of money over the course of a year. But those networks also pay that 4.7p when calls are connected to them, which cancels out a fair bit of it. Now, I don’t doubt there are some profits in there. But, to be frank, I don’t see much real consumer benefit in cutting termination rates. It seems to me that any profits lost from MTRs would simply be generated from increased charges elsewhere. Even if new tariffs offered ‘more value’ they’d be likely to cost more. Regulators have even suggested that we could cut MTRs and then pay to receive calls. Do I hear the sound of a lead balloon going down?

And I’ll confess I’m suspicious of 3’s volte-face; arguing in favour of increased MTRs when it suited and then arguing against them when it didn’t get its way.

Okay, so none of us likes spending money when we don't see a benefit – but talking about “bill shock” and a “a secret tax on consumers” is more like tabloid rhetoric than an informative campaign.

And some of the campaign supporters seem to be sending confused messages, too. For example, the Plain English Campaign said “Consumers deserve the right to understand complex issues that affect them in the simplest possible terms and we support any organisation that strives to do this” – which seems to suggest it would just as happily support an increase in termination rates if the organisers had a ‘Crystal Mark’ on their literature. There’s also plenty of talk from organisations about supporting the campaign because it’ll reduce charges – although that's certainly not guaranteed.

I was pleased to see that Martin ‘Money Saving Expert’ Lewis was, like me, unconvinced by the campaign. He told us “We’ve decided not to back the Terminate the rate campaign for the time being. As the decision was in the balance we put it to our users and the majority weren’t in favour of doing so. This is an important issue and one to look at, though we’re not fully convinced a campaign run by a big mobile phone network which is in its own vested interest is the right way to go forward”. And that makes me wonder how many other organisations had also declined to join 3 and BT’s party.

Terminate The Rate plans to give its petition to Ofcom later this month. And then what?  Perhaps my biggest complaint about the campaign is that, even before it launched, the European Commission had told Ofcom and other European regulators to make sure MTRs reflected actual costs. And MTRs are already set to drop next year. Which suggests everything’s in hand. And in 2011, when the current charges are reviewed, we’ll probably see a decent-sized drop in MTRs... which would have happened regardless of any campaign.

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Opinion Articles

Last week at The Fonecast: 23rd September 2013

Black days for BlackBerry

Mark Bridge writes:

There are bad weeks... and there are BAD weeks. Blackberry had one of the latter. It all started so well. The company announced a new flagship phablet – the Z30 – and said it would be launching its BBM instant messaging service for iOS and Android handsets at the weekend.

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Last week at The Fonecast: 16th September 2013

iPhone, iPhone, so good they made it twice

Mark Bridge writes:

iPhone, iPhone. Two of ‘em, one dearer than the other but neither especially cheap. One with a 64-bit look-at-me-I’m-fast processor, the other much like an iPhone 5 with a coloured rear panel.

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EC's Neelie Kroes says ‘we must act now’ to change European telecoms rules

Mark Bridge writes:

Following Wednesday’s ‘State of the Union’ speech by EC President Jose Manuel Barroso, EC Vice-President Neelie Kroes has emphasised the urgency of changing the way telecoms companies operate across Europe.

Ms Kroes wants to cut red tape, end roaming charges, reduce call costs and introduce ‘net neutrality’ across Europe.

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Last week at The Fonecast: 2nd September 2013

Breaking up is profitable to do

Mark Bridge writes:

So – we take a short break at the end of the August ‘silly season’ and one of the year’s biggest mobile-related rumours becomes fact. At least we’re back in time to report on the final stages of the Vodafone/Verizon deal. Yes, it looks as though Big Red will be picking up something like $130 billion for its 45% stake in Verizon Communications… possibly within the next few hours. Just don’t mention the tax, okay?

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GSMA not cowed after EC compares mobile calls with milk

Mark Bridge writes:

In this week’s podcast we talked about a recent European study into call costs that had been highlighted by European Commission Vice President Neelie Kroes.

We agreed the headline was shocking - but also said there were potentially many other tariff factors that weren’t being compared.

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