back to article Ofcom report: Mobile operators feel the squeeze

Ofcom's annual assessment of communication industry shows that mobile revenue is still way down on 2008, but usage is way up, forcing operators to find new ways to cut costs and increase revenues. Users are more attached to their handset than ever, with around half of smartphone owners counting themselves "addicted", but despite …

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Silver badge

Wow!

It's like a mail company complaining that Amazon ships though them, but they make all the profit.

Wake up operators. You are supposed to move bits around. That's what I'm paying you for. If your prices are reasonable (not nessesarily cheap) and your service is good (= no fiddling with the data!) you will get your money.

For example I'm not at the cheapest ISP, it's a bit cheaper than the local "BT" equivalent, yet it doesn't ever complain about there being the Internet. They just move bits. If their network should ever get congested (never happened in my area so far) they just spend the few extra quid to upgrade it. It's not like backbones cost anything these days.

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Erm, no....

It's more like a postal regulator saying that the rise in internet shopping hasn't resulted in increased profits for Royal Mail and TNT.

These are figures from an industry body, not a whinge from an individual ISP. Get a grip.

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FAIL

Data services

For me data services even though I pay for 512mb isn't very usable, webpages take far to long to load even with strong 3G signals, i am often left wondering why apple phones on the same network work so much faster and what the hell I am paying for. i think I have used at most 12mb in a month, probably because I use it as a last resort now.

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WTF?

Bizarre statements found in the morning.

"Right now the amount of money that Google and Facebook are making is tiny, in the big picture, but it is increasing and the operators are about to spend billions building next-generation networks so that Google and Facebook can make more money faster."

This is like complaining that poor, poor Dell is forced to build PC in a sweatshop so that Microsoft can then rake in all the cash.

Network operators build networks so that people can buy network services.

Google and Facebook build ... whatever ... so that advertisers buy advertisement services.

If network operator want to sell advertisement services they are not network operators. They are Google. Or Facebook.

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Windows

.."complaining that poor Dell is forced to build PC in a sweatshop ..."

Are you referring to that excellent company called Foxcomm?

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FAIL

FoxComm?

"FoxComm is a regional partnership for public safety communications consisting of Calumet, Outagamie and Winnebago Counties located in Northeast Wisconsin. ..."

No, I don't think he is.

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Windows

Dammit, wrong key

Of course I meant "Foxconn". My mistake. But, they'r adjacent keys.

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Stop

But....

Look at all the current "deals" people are running such as the Virgin freebees. If the network operators are hurting that much then they're not showing it much.

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Recording calls

It is my understanding that a call can be recorded so long as one party actively engaged in the call consents (ie you can record yourself, but recording your neighbour's calls is a no-no). After all, don't you think they're probably recording you "for staff training purposes"?

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Silver badge

indeed

I know someone else who was caught out by this - they didnt check their bills as they dont use the phone for many calls (well within their plan). It took a couple of months of wrangling because the first £1 per day was outside of the 30 days billing period.

Orange updated their T&C to reflect the "change" a couple of months ago.

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Windows

Bad luck, Squire. Or, wrong operators.

Totally different in Finland

Had a bloke ring me about 6 months ago. (Saunalahti is my operator). "Would you like 3 SIM cards, unlimited data for €5/month for all 3 until June?"

"Erm..." (Terry Fuc*kwitt mode) "Yep".

That's what I got. The price has doubled to a staggering €10/month since, and my total phone bill's €40/month - but that includes €20 to pay for the N8. 300 minutes free calls, Saunalahti <-> Saunalahti or Elisa. It's what most of my friends (yes, I have a few) use.

It's my only interenet connection at home, it's sweet, reliable and I can use as much data as I can eat. No cap.

I just cannot understand how they make any money at all....

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Stop

One party consent

AFAIK this is true for certain states in the US, but in the UK mutual consent is required.

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Windows

"Calls may be recorded for your security"

I've always taken the "may" in that phrase to mean permission to. Therefore, I can, and do record calls. N8 has the facility.

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Anyone got specific details on recording legalities?

Until reading this I was sure that as long as you informed they other party you are recording the call and they agreed (by not hanging up) then it was fine. After all almost every single thing I call where I'm required to speak to a person these days has a short message stating that calls may be recorded for training (HAH!) purposes.

I've not yet needed to record a call but with the way contract calls go I'm almost inclined to do so when it's time for renewal next year. I'd be interested to know what has been said if anyone has specifically told a company they're recording the call.

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Black Helicopters

recording you "for staff training purposes"

Whenever I have a dispute with a supplier, I quote this to them, and invite them to check that my recollection is what I say it is. Mysteriously, my particular call "doesn't appear to have been recorded, sir". "No problem" I say, "You can hear my recording instead". At which point they suddenly remember that they can solve my problem after all.

If you are ever in a situation where you need to use the recording in court, transcribe it first, and introduce the transcript as evidence. If the other side challenges you, produce the recording.

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Alert

This is England

remember. Anything not prohibited by law, is allowed. It is illegal to record a telephone call where *both* parties are unaware (e.g. tap a telephone).

Therefore, by a process of induction, you recording a call you make to anyone, or that anyone makes to you, is not illegal. However, bear in mind ...

Regulation of Investigatory Powers Act 2000

Telecommunications (Lawful Business Practice)(Interception of Communications) Regulations 2000

Data Protection Act 1998

Telecommunications (Data Protection and Privacy) Regulations 1999

However, currently AFAIAA (IANAL) submissions to court need to be paper based. So if you plan on using a call recording, you need to transcribe it, and present it as a "simultaneous transcript". If challenged, you can provide the recording.

It would be a very stupid firm that challenged an obviously verbatim transcription. If only because it then permits a court to hear their operatives tone of voice.

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Facepalm

Data vs Voice

Data is a Big problem.

For the same customer revenue (i.e. £20) the traffic on data compared to voice is about 100 to 200 times as much.

Virtually ALL data traffic is i/o from the Network, many voice calls terminate on same network.

While operator pays termination charge for O/G voice call, the Operator receives revenue from I/C voice call. For Data the operator pays for the traffic in both directions.

LTE charges need to be much higher, maybe x10 to be profitable. Really data at the minute is subsidised by voice and SMS. SMS of course is a great revenue earner that costs nearly nothing to run. Internet IP IM in contrast makes the operator no money and costs them 1000s of times more than an SMS.

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FAIL

Charitable service?

The way you describe the situation makes it sounds like the operators are providing a charitable service? Where's the "donate" button?

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Meh

Simple Economics Apply

Data communication is not a 'big problem', it is a service like any other.

So... if service demand exceeds supply, you increase the price.

If service capacity exceeds demand, you reduce capacity (or drop the the price).

Or go out of business if you find you can't compete.

Why should a telco be any different to any other business?

If telcos choose to underprice their mobile data services, the problem is one of their own making, and the solution is entirely in their own hands.

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Pay to play

The operators only have themselves to blame. The bids in the the UK for 3G spectrum in 2000 were insane as it was clear then that wifi would affect price and service expectations. In most other European countries with similar bidding procedures (Germany and the Netherlands spring to mind) this led to rapid consolidation in the market and a drop in the number of operators. The losses incurred by writing off the investment showing up in the government's books as reduced tax take. Only now is the UK seeing parts of this with the T-Mobile/Orange tie up.

Regarding the figures - revenue is not profit. Google is likely to be turning a profit on those ads but as far we know Facebook is still burning venture capital. In any case the operators know exactly what is going on their networks and they are in a position to make the services "pay to play" to get access to the ad revenue or even substitute it for their own - everything goes through their proxies after all.

As for pre-paid versus post-paid - both forms are legal contracts. Arguably pre-paid is better for establishing a fair price for bandwidth - the service stops working when you run out of credit so there is a real incentive to top-up to continue to chatter. But that isn't the real battle. As you point out the cost of customer acquisition and handset subsidies are painful front-loaded costs that the industry needs to wean people off - Andrew Orlowski pointed this out years ago. But if the industry continues pass on the real costs* of providing the service to consumers then it has only itself to blame.

* The apparent costs in the UK continue to be significantly ahead of those in comparable economies such as Germany where the operators are making money, cf. Deutsch Telekom's most recent results which were buoyed by revenues in Germany for data services.

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Anonymous Coward

[title]

Yes, stop all this nonsense of 'free' handsets and upgrades. Charge people a fair price for what they actually use and maybe there would no longer be all that money wasted on luring new customers only too lose them. Offer, and consistently maintain, a fair price for a good service and you will attract loyal customers.

As to data. In Italy last month I was paying €24 a month for 10GB of data (TIM), and despite being in a remote rural location the speed was ten times faster that I can get here in central London; so fast and reliable could easily do a full Linux upgrade (>600MB) online. Whereas, back home in WC1 Three's £15 for 3GB/month not only runs at 1/10 of the speed but cannot manage even a 30MB linux kernel without stalling.

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Bronze badge

What data service?

Geography and population concentration means that they have a lot of customers for data services, but they're not where I am. There's voice coverage on the local motorway (I wasn't driving at the time), but data keeps dropping out.

So I really don't have much use for mobile.

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Silver badge

Quit whining

I sent a friend in the UK a text. I'm on a contract. €0,28. Which by my calculation makes it about €750K per megabyte. A real money spinner, that.

I pay for an amount of data. A service. That is what they are to me. Like my broadband provider, I stuff data in, and I pull data out.

Perhaps if they wish to reduce the amount of data on their network, they might consider pulling their fingers out and adding blacklists/whitelists to Android. I'm sure a fair few people wouldn't miss the advertising - which is frequently the slowest thing to arrive, especially for those on EDGE. But no, that would mean implementing firmware revisions. Apparently Android 2.2 is available for the Defy. Not with Orange it isn't. I guess they figure I've got my phone, tweaking it now won't make them money...

Swings and roundabouts, sure, but things I'll keep in mind at contract renewal time.

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Coffee/keyboard

Funny definition of loyalty

"The first thing operators want to do is get customers on to contracts, and then they want to lock them there for as long as possible. The EU caped mobile contracts at two years, pre-empting operators who'd probably have gone for longer. Smartphones help there, but operators are also bumping up the cost of calls for prepaid customers, and blaming on the regulator's imposed cut on termination fees.

That should keep customers more loyal for longer "

So, er, by the operators' logic inmates in prison are incredibly loyal to Her Majesty's Prison Service. Wow.

People are using third party services rather than the operators' because the operators' invariably suck. The sooner they realise this, and give up to become the dumb pipes for data they were always destined to be, the better.

Esc because they don't want you to escape your contract.

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WTF?

Facebook and Google provide the value - Operators profit nonetheless.

Let's get this the right way around.

Facebook and Google (et al) provide the value here. We only buy the data so we can access those services.

It seems entirely reasonable that they should only get a small portion of the revenue.

Try this thought experiment. The operators could easily offer a data plan which didn't allow access to facebook/youtube/google/iPlayer.

How much do you think people would pay for that?

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Joke

"caped mobile contracts"

Are they some new kind of superhero? Do these new EU-mandated contracts have special powers too?

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Thumb Down

Yeah, i'm not crying.

Lets look at the pre-tax profits in 2010 for each company shall we:

Vodafone - £8.7bn

Everything everywhere (second quarter 2010 only) - £309m

o2 - third quarter 2010 only - €481

Three - £173m

So, yeah, not going to shed any tears for them here...

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Angel

Vodafone pay tax?

I think you might be confused.

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Facepalm

Dear Telco operators

Your inability to price your service correctly... or run your network efficiently... is not my problem.

If there is excessive demand, your prices are too low. Set the price higher, and there will be no demand problem.

If there is surplus capacity, that is entirely a problem of your own making. Stop adding capacity.

Either way, you have only yourselves to blame.

Idiots.

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Meta-question

It seems fairly universally the case that Reg readers are not buying what the mobile industry is selling, here, so why exactly does El Reg continue to pay Bill Ray to act as a barely-disguised-at-all mouthpiece for the mobile industry, when all you're doing is damaging your credibility with your readers?

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Happy

Meta-answer

Maybe they get more page hits that way?

Remember, if you aren't paying then you are the product.

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Mouthpiece

I don't agree with everything Bill posts but he doesn't to me come across as the mouthpiece of the industry. His articles on getting a highspeed internet connection in Scotland were far from that.

I do agree, however, that the line that broadband is "too expensive" for operators that El Reg often peddles is codswallop. There are just too many examples in comparable countries where that isn't the case. @ UK telco's try some investment rather than just "returning the money straight to shareholders".

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Really?

You haven't noticed how every article he writes on mobile companies is basically a more-or-less thinly veiled regurgitation of the mobile companies' argument that Google should be giving them lots of money? Must be at least half a dozen of them by now.

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Er, that was my point?

Why would they get more page views that way? It's not as if the topic is luridly sensational enough to draw people in precisely *because* they're so outraged/disgusted/whatever (in Tunbridge Wells, no doubt). If you keep printing cellphone company propaganda that everyone can see through five miles away, you're damaging your reputation as a vaguely credible / incisive media outlet, hence driving away readers. Why exactly do you think this crap is going to result in *more* page hits?

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Title

Well in the states the same can't be cried about as the government on alot of levels subsidizes communications.

Dating back when cable first came out alot of the towns owned (and may still) the cable systems while the cable companies provided the service. Back then if the people of the community had a problem with rate increases or service the town could boycott the cable company since they owned the lines to begin with.

However even back then you'd of only have been boycotting yourself because they didn't think ahead enough to have more than one cable company in an area.

Wireless surely isn't much different. In the states cell phones are considered a necessity and tax dollars are being used to give those that can afford to pop out babies, smoke, drink, and watch cable television free cellphones because they can't afford it.

If governments deem the people need something then you know the taxpayers at one point are paying for it one way or another even if they don't subscribe to the service.

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FAIL

You again?

Mobile is very different.

while fixed line was, in most countries, built by the government with taxpayers' money, mobile spectrum was usually sold or auctioned with conditions such as % of the population covered within X years. This was also the case in the USA. Bending of the rules happens all over the place but I've yet to come across anything quite as poor as the FCC's bending for Light Squared.

As for local monopolies - these are quite common all over the world for services like water and electricity. Whether they work or not depends on how much regulation and oversight there is.

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