Feeds

Mobile operators argue with Ofcom over termination rates

They're too high! No, you fool, they're too low!

Choosing a cloud hosting partner with confidence

The UK's bigger operators are taking Ofcom to the Competition Appeals Tribunal, arguing for higher termination rates - except Three, which wants the opposite.

Vodafone and Everything Everywhere are challenging Ofcom's position on termination rates, with an appeal to the CAT that's supported by O2.

The three operators reckon the regulator didn't include the cost of spectrum, or consider the advantages of subsidising low-volume users, when calculating its numbers. Three, on the other hand, has lodged its own complaint claiming that rates should fall faster and further, though no one seriously expects anything to change.

Termination rates are the fee paid by the caller's network to the callee's network. So if one is with Vodafone and calls a mate on O2 then Vodafone pays O2 4.18 pence per minute to terminate the call.

Those rates are set by Ofcom to prevent dominant companies shutting out competitors by charging excessive rates, but mobile terminations are much higher than their fixed-line equivalents.

Ofcom is committed to reducing the mobile termination rate to what it actually costs to transport the call, somewhere around .7 of a penny a minute as Ofcom calculates it. But Vodafone argues the regulator hasn't considered the sociological advantages of subsidising those who make few outgoing calls, it also reckons Ofcom got the basic figures wrong in failing to include the billions of pounds the operators spent on those 3G licences in 2000 amongst other things. By Vodafone's calculations the rate should be 1.25 pence at the very least.

It might seem petty, but the Financial Times reckons that termination fees make up ten per cent of an operator's turnover so a difference of a penny matters enormously.

Right now most of that money comes from fixed-line providers; BT, TalkTalk and so forth. Fixed operators have to pay the mobile termination rate, but only receive the much-lower fixed rate in return so are firmly on the side of reducing the rate as fast as possible.

Three would also like the rate dropped, or (ideally) scrapped entirely. The UK's smallest operator reckons it has least to lose, and in its presentation to the CAT it argues that Ofcom has overpriced the cost of delivering calls.

The Competition Appeals Tribunal isn't known for the speed of its decision making, so don't expect anything to happen soon. Ofcom's previous ruling will apply until the appeals are completed, and only lasts until 2015, so rates will start dropping and network operators will have to start looking for other sources of revenue while the case rumbles on.

Coincidentally Three has just told customers they'll be paying a penny for SMS receipts from 6 June, which should help keep revenue up: expect similar innovations from the rest of the pack over the next year or two. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Sea-Me-We 5 construction starts
New sub cable to go live 2016
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
EE coughs to BROKEN data usage metrics BLUNDER that short-changes customers
Carrier apologises for 'inflated' measurements cockup
Comcast: Help, help, FCC. Netflix and pals are EXTORTIONISTS
The others guys are being mean so therefore ... monopoly all good, yeah?
Surprise: if you work from home you need the Internet
Buffer-rage sends Aussies out to experience road rage
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
MOST iPhone strokers SPURN iOS 8: iOS 7 'un-updatening' in 5...4...
Guess they don't like our battery-draining update?
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.