Who pays 'mobile termination charges'?

By David Stewart

Some of the media coverage (and some comments on the blog and summary) raise the issue of whether there is a prospect of UK consumers being forced to pay to receive calls (or texts). Personally, I think that's unlikely - and here's why.

There are two different sorts of charges to keep in mind:

• Termination charges - that is, the money paid between phone companies to complete calls.
• Retail charges - that is, any amount paid via the phone bill (or that uses up pay-as-you-go credit).

In our consultation, we aim to start a debate about the future of mobile termination charges - that is, how phone companies pay each other for calls between different networks. Those charges are not paid directly by consumers (although the cost is ultimately recovered from consumers). In the past, most of the time, these charges have been capped by a regulator, partly because they are mostly invisible to consumers. In our consultation, we ask whether there is a better way to deal with this issue. (We're not the only ones looking at these issues).

Retail charges - that is, how much consumers pay - are set more simply. Suppliers choose what price plans to offer; customers choose a supplier. We don't tell suppliers how much to charge (since competition limits prices anyway) and nor do we tell the suppliers how to charge (for exampe, whether to charge for outgoing calls, incoming calls, lump it all in with a monthly charge, or some combination).

We get it that a lot of people don't like the idea of paying to receive calls (to put it mildly). That's one reason why I think it's unlikely that UK suppliers would choose to charge for incoming calls. (That said, provided competition is working, I don't see a case for prohibiting it, if the supplier and their customer both agree that's what they want to do).

When we think about the future of mobile termination charges, we want to think widely about the options. One thing we'll be looking to understand is the effect that any changes might have on retail prices. And given our duties, we won't make any detailed proposals (let alone changes to the rules) without carefully considering the effect on consumers - despite what you might read in the press.

But thank you to all of those who made comments - keep 'em coming.

Comments

[Chris T]

Please Please don't make people pay for receiving telephone calls. I was with a hiking party in Glencoe in Scotland when the weather rapidly turned from bad to worse-some of us got seperated. Mountain rescue were able to co-ordinate a successful rescue-even when my pay as you go phone ran out of credit I was still able to receive phone calls from my fellow climbers & hence save several lives. Don't be stupid enough to remove this lifeline.

[Dean Bubley]

The main problem I see is that past termination rates have been based on a simplistic view of calls arriving on fixed vs. mobile networks - defined by number ranges.

The problem is that convergence now means that calls to a mobile number might terminate via fixed DSL, or calls to a fixed number might terminate on a mobile handset delivered via VoIP or 3G. Or they might end on a voicemail server, or even terminate simultaneously on both fixed and mobile devices.

Basically, whatever happens, the current 07xxx number ranges (on their own) are no basis for determining a higher termination rate than a fixed number, because the cost involved (spectrum, infrastructure) are no longer as obvious as they used to be.

Dean Bubley
Disruptive Analysis

[Steve Franks]

I cannot think of any other goods, or services, where someone else can force me to pay for their actions. This
Why should mobile phones be different?
It is bad enough that I have to pay to receive calls and text messages when I'm abroad. Why can't mobile phone providers just warn callers that they are about to make an international call?
Allowing termination charges opens a loophole that could allow unscrupulous, or vindictive, people to run up huge bills for other people.
How does this avoid being extortion? The implied threat being that my mobile phone will be cut off if I do not pay up.

[Anirban Roy]

@Dean Bubley

Without saying what this means for termination rates (beyond noting that convergence of this sort will put pressure on termination rates), our thinking has gone along similar lines. VoIP, WiFi enabled handsets, femtocells with DSL backhaul etc means that we're already long way from the world where you knew that your call would be routed purely via a traditional fixed or mobile networks. And it's not going to become any simpler...