One of the reasons mobile operators have thrived in Europe is because they have been able to keep the call termination charges quite high, but that practice is coming under pressure from British telecom regulator, Ofcom.
Starting April 1, the mobile network operators have been asked to comply with new rules that limits the fees they can charge for call termination. These reductions come into effect through 2011.The 3g mobile carrier, 3 for instance has been asked to reduce its termination charges by 45% to about 5.9 cents a minute, which is still high.
While it might seem like nitpicking, but now the smaller VoIP carriers can terminate calls on mobile phones at lower prices, giving their customers in turn a better deal. Just to clarify, if you use a VoIP service, you always pay more to call mobile phones, which is primarily because the call termination charges are much higher on the mobile networks. It is a worldwide problem.
Nevertheless, at least in the UK, the mobile VoIP service providers are ready to party. Why? Because now a call originating from a mobile VoIP client, can go over 3G and terminate to a regular mobile phone at an affordable price. Nice way to do an end run, around the mobile carrier’s own network. It also explains why Orange and Vodafone have been disabling the VoIP features on the new Nokia N95 that comes ready to send calls over euro3G and WiFi. I did not believe their explanation, even for a minute.
thanks to this change, which could cut call termination charges by close to a billion dollars.
Via Rebtel Blog
3 comments so far
2:55 PM PT
Since everyone is paying the same terminating charge for eg 3’s network, what would the difference in competitive position be for a VoIP provider. Isn’t it the case that a large mobile provider will in general have an advantage, because if it has 40% of the market, the mobile-mobile calls will be 40% on net and therefore the big network will be able to offer a up to 40% lower average price per call than someone who is only running a tenth of a percentage point of the market (Think VoIP provider)
But could anybody explain why it is fair for 3 to recieve a higher terminating charge? If it costs more to build the network or to operate teh entwork, should tehy e in the buisness at all?
2:58 PM PT
Raindeer,
I think from a mobile VoIP service provider’s perspective, i think what will end up happening is what we are seeing in the US: profitless prosperity for most, and eventual demise. one or two will make it because they might have some market penetration at that point. Skype comes to mind, if they finally get their own clients out.
On the question of 3, well that is an issue I hope someone in the UK takes up with Ofcom.
6:28 PM PT
I believe that the operators won’t like it but these ‘progressions’ will continue 2 happen.
However I don’t c any going out of business soon. Also they dabble with their “walled garden” but don’t c much real openness.
Like a lot of utility/legacy players they are still finding ways 2 make this ‘new world’ pay.
They maybe slow but their not stupid. Well ….
Helps out the VOIP players somewhat but not a huge difference that I can c.
Lal
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