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back to article Mobile termination fees go to Competition Commission

BT's argument that Ofcom used the wrong formula to set mobile termination fees has proved compelling - the ongoing case against the regulator has been handed over to the Competition Commission. The case is being pushed by BT and 3UK, the two who have most to lose through the new termination fees set by Ofcom in March last year, …

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AJ
Stop

EU Hopefully Will Scrap Termination Charges...

... These are un-necessary charges that do not reflect how much it costs a company to have a call connected to another network!

But maybe BT should practice what it preaches and do away with their connection charges which they introduced on landlines, customers should not be charged a connection charge or minimum call charge, just what they use!!!!!

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termination fees?

er, what are they?

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TelCo Charges

@ AJ

Connection charges have always been there just buried in the costings formula for call charges. Whilst you may argue that they do not accurately reflect costs, as they do include an element of profit, for BT they are based upon an OfCom-regulated cost analysis based upon all associated costs of running a network, carrying calls and handing them to other TelCos.

@ this

Termination fees are supposed to cover the cost of carrying the call to the final recipient. The originating TelCo charges these to their customer and hands that money on to the Terminating TelCo.

Having worked in the industry in Interconnect Pricing, OfTel/OfCom have often relied upon being able to regulate BT's charges to control other TelCo's charges where historically the formulae have been based upon BT's network costs.

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Boffin

@this

A "termination" fee, is the charge that a network makes to receive a call.

If you make a call (for example) from T-Mobile to Vodafone, then Vodafone have to pay T-Mobile for the right to do so...

The cost associated with the call is split between the two ends of the call (the cost of initiating the call is minimal compared to actually running it), so if you only ever receive calls your company makes a loss.

E.g. if you get a pay as you go sim, and only ever receive calls, the company is providing the network link, the bandwidth, and the links to the other networks - all of which other companies get to charge someone to use. ;)

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terminating fees are....

> er, what are they?

they are the fees that the caller network (i.e. your phone company) pay the other calling network (i.e. the phone company of the person you're call) for accepting the call.

The mobile operators charge a higher fee to receive the calls as it costs them more to route them to the mobile phone. BT charge for landline calls but it's a fraction of what the mobile networks charge.

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Silver badge

My personal fave...

When a UK Orange phone is roaming in France, it was actually cheaper to make a call when roamed onto any other network, than when roamed onto Orange Fr!

Both of whom are owned by France Telecom...

Now tell me again how this isn't blatant profiteering again, I keep forgetting!

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Joke

Termination fee...

is what you pay to use one of these:

http://en.wikipedia.org/wiki/Suicide_booth#Futurama

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Anonymous Coward

termination fees?

The rate that telecom networks charge each other when one wishes to make a call to the other. The charges are supposed to cover the cost over time of building the networks out for which mobile operators were obligated to do so under their licenses. Since mobile operators can't charge cretail ustomers when they receive a call this is the next best way to recover these costs.

The rates for calling mobiles are higher than for calling fixed networks because the costs of building mobile masts across the country and radio spectrum is significantly higher than the cost of putting cables in the ground. The fixed network in this country is old and effectively paid for so rates for calling BT for example are less than 1p/minute whereas calling mobiles is approx 6p/min.

BT wants to get these rates down because it costs them a lot of money which they are struggling to pass on to customers due to the competition from mobile operator and VOIP tariffs.

3 as a later entrant received special treatment because it had to build its 3G network without any customers to generate revenue from. The problem for 3 is that they still don't have many customers and they were the operator that sold tariffs with lots of cross network minutes meaning they have high outbound costs. They offset that with the much higher charges they generated from calls received on their network. OFCOM wanted to bring down their rates as they deemed them more established and no longer in need of special treatment. They probably stand to lose significant amounts of money from their rates being reduced.

The other operators support OFCOM because they didn't have to reduce their rates too much but saw 3's rates lowered considerably (saving costs) albeit still higher then the rest of the market.

I think thats about it.

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Anonymous Coward

EU Hopefully Will Scrap Termination Charges...

AJ I don't agree with your comment. OFCOM uses complex cost models to calculate the rates and this model does not include all the ridiculously high licence costs the operators had to pay for 3G for which they will never recover.

The case here is whether OFCOM has made the correct assumptions in its models. Don't forget 3 is asking for rates to be higher not lower. Their second claim of doing away with termination rates altogether feels like "if we can't get we want then no-one should benefit".

BT are being hopeful because they know how much a mobile network costs to build since they built one with O2 before they sold it off.

What there doesn't seem to be is consistency across the EU about how the rates are set and some regulators seem to be influenced more by the local operators then others. I would state that OFCOM are one of the stricter and more professional regulators within the EU in my experience although they don't always get it right every time, but then that is what the CAT and CC are for.

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Coat

In the Stowger age...

... Post Office Telecommunication's (POT) used to have a suite of meters in every exchange, to charge other parts of POT for the trunk call usage!

Mine is the duff Dust Jacket 1A.

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Termination Fees

“er, what are they?”

The reason that you have no clear way of knowing what it costs to make a phone call. Together with “Flag Fall” or “Call Connection” costs and a myriad of “Premium” rates they serve to confuse the customer.

Get rid of the lot of them please!.

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Stop

Dont see what all the fuss is about

Why should mobile firms cut the termination fees?

Free Mobile Handsets, Free LineRental, Free Cross-Network Minutes, Free Texts, Free Xbox, Free Holiday, Free Laptop, Free broadband, Free this free that when you sign up for a mobile.

Blah blah boring greedy public.

The reason im losing my job..... because the general public are total absolute misers and penny pinchers when it comes to mobile phone tariffs, yet the very same public squander thousands being too lazy to change to a significantly cheaper credit card company or downsize the tv channel bundles that you never watch etc. Borrow money, to pay interest, VAT and TAX on a depreciating car...? The mind boggles when they waste thousands but fine toothpick a mobile contract.

Nobody realises that Gordon Brown [aka professional thief] took circa 25 Billion from the mobile networks for simply a LICENCE to use the radiospectrum for 3G purposes. That was before a penny was spent on equipment to build an actual network.... they have to recoup this money somehow or has someone forgotten this?

Just how do you think mobile networks of the future are going to carry your phone calls and texts if you wont pay any money for them? If we carry on like this you will have your phone calls interrupted with advertisements and get text adverts all day long to pay for your usage.

EU meddling has already cut Roaming significantly( I agree wholeheartedly with this one because it was simply extortionate...) they have also brought down Cross-Network charges, most to a flat rate tariff, put another way, they are now included in your 'free' minutes

If you take away all the revenue streams just who is going to build the other half of the 3G networks? Who will invest in 4th generation networks for the future? Yeah laugh now about 4G... but its already on the agenda.

Dont you get enough for "free" already? No, really, you do. Its obscene.

Or would you like to pay full market price for your handset instead of the free [subsidised] one you forgot to mention?

Imagine they hadnt put broadband in all those years ago, can you see yourself using dialup now in todays environment? No, i didnt think so, just like we're going to need 3G just like when you said "how did we *ever* manage without broadband?

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Black Helicopters

Free Calls...Tomorrow

@AC

I agree about the 4G {Actually it's 3.9G, but lets not split hairs} since I'm currently answering questions from a major operator on LTE. It will require additional investment from the operators and OfCom is still looking for their (1 Billion) pound of flesh when auctioning the spectrum this summer.

So the costs of building out to 99.8% of the population will all start again.

@Those who want things scrapped:

How do you think that this will make your calls cheaper? The operators will not receive termination costs from each other, and will not have to pay them either, but the only net saving is a bit of accountancy.

Calls charges from BT could 'potentially' drop ("Of Course" BT will pass on the savings, right?) but for all your other calls it's irrelevant whether you pay 1/2 the money to company A, and 1/2 to company B or all of it to company A? Lost termination charges from BT will, if anything, actually INCREASE your per minute tarriff as the Operators pick op the costs from elsewhere

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Jobs Horns

Mobile companies profits too high

The mobile companies profits have historically been exceedingly high in relation to their investment. A licence to print money - just like ITV in the early days. This was because they could 'hide' their charges i.e. lack of competition when terminating calls, extortionate roaming chages etc etc and implicit collusion amongst themselves. Trying to determine the "correct level" of any one of these from the outside is impossible. All attempts by Ofcom to reduce their income in these 'non-competition' areas are to be welcomed.

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W
Flame

@ "Dont see what all the fuss is about" AC

>"Just how do you think mobile networks of the future are going to carry your phone calls and texts if you wont pay any money for them?"

-The customer has the money. The company has the product and the choice to invest in developing new priducts with it's profits if it thinks the customer will pay the price that will need to be asked. Why should we accept that 4G has to happen? 3G is far from the roaring success that 2G was. But the mobile companies willingly paid high prices nonetheless, for fear of being left behind. Nobody forced them to Investments decisions should only be made based on what the market will allow, not on some blind faith or an arrogant assumption that technology X will be the next big thing when there's no evidence to support such claims.

>"If we carry on like this you will have your phone calls interrupted with advertisements and get text adverts all day long to pay for your usage."

Maybe. Maybe not. If customers are sufficiently annoyed, they'll just stop using the product/service. Adverts are not an inebitable sticking plaster for a failing business model. If the public are not willing to pay what the companies need to charge, and the companies answer is to give away enticements that (you claim) they cannot afford.

>"The reason im losing my job..... because the general public are total absolute misers and penny pinchers when it comes to mobile phone tariffs"

-Nope. The reason you are losing your job is because of bad management. There is no obligation on the public to splash the cash on your industry's products or services.

-My parents used to run a garage, petrol forecourt, and village store. The petrol often cost more to buy, per litre, from the wholesale suppliers than the price per litre that Asda et al were selling it for at the pump. There were many other market factors that rendered the business unviable in the long run. So my parents accepted the fact and shut up shop and got new jobs. If, instead, they were running a multi-million company, they'd have probably been able to screw the shareholders and the public by securing a nice pension, generous severence pay, subsidies from the government, regulatory help...the list goes on.

>"Imagine they hadnt put broadband in all those years ago, can you see yourself using dialup now in todays environment?"

-You don't miss what you've never had. With badly thought out comments like these I'm beginning to think that your telecoms job is as shop floor staff at Phones 4 U. Am I right? Are you the one with the one with the felt tips that scrawls "Today's Special Managers Offer" on the flipchart. Or the "greeter" harassing folk on the street with the flyers.

[Can we have a fish in a barrel icon, or should I have used the blue circle guy?]

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Unhappy

3g licence fees

It's a bit rich saying "you should pay termination fees to help pay for t3G licences"!!! Remember, the price was set *by the operators* as it was an auction. If there was no business case, then they shouldn't have bid.

So *I* have to pay for your companies' bosses incompetence and bravado? Why?

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Termination fees - sanity please

If you use something belonging to someone else, you generally have to pay for it, otherwise there is no funding to keep that "something" in existence. Mobile networks require funding just like all other infrastructure and their (wholesale) charging for terminating calls to their customers is entirely justified.

What is not justified is the level of charges that mobile companies have historically charged for termination, which have allowed them to subsidise the cost of handsets (how did you think all those "free" phones were paid for?). The time has come for the mobile operators to move to cost-orientated termination charges (just like the fixed networks eg BT) and Ofcom and the EC regulators are trying to push this through. Support them in the interests of competition!

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