The Secrets of Telcos

By Guy Kewney  |  Posted 2005-11-29 Print this article Print

The thing is, the money you pay for a phone call here is split, at various rates, between the network where it originates and the network that terminates it—hence the "termination charge"—and unlike the common North American method, the person receiving the call pays nothing for it. Up until now, the termination charge amount was hidden. As a result, the charges could vary widely, and sometimes were simply enormous.
How enormous? Well, its still hard to get a peek at the books, but the best guess is that when the termination charges are published, the networks that have been taking the biggest slice will be reducing the charges substantially to avoid public rage.
Substantially? I am told, by more than 20 percent. Thats not to say that theyll reduce termination charges by 20 percent—its worse than that. Theyll reduce mobile phone bills by that margin. So, the guilty will be identified by the amount by which they reduce their prices, to other networks; it wont be apparent to phone users. But they will have to change their network charges, and theyll have to do it now, because theyll want to be sure that when the curtain parts and the horrible truth is revealed, the stage has at least been cleaned of blood. The FCC approves telco mergers. Read more here. And at the end of this process, it will still be virtually impossible to know whether the last call you made cost you more or less. The thing is, almost nobody is billed per call. Typically, the market is on a $50 per month flat fee for (say) a thousand minutes of talk time per month, or a thousand text messages or some combination. And, typically, the business user is on a similar type of bill, but paying more like $80 a month. You only pay for a call, then, if youve used up your "free minutes" for the month. So in another six months, what youll probably see isnt an increase in charges per call. Rather, youll see an effort to offer more "free" minutes per month, for the same charge. And the effect of that, simply, will be that people use their mobile phones more, which means people will call them back on those numbers, rather than on the (cheaper) land-line numbers. At the end of the day, youd need a very detailed spreadsheet to find out whether this meant an overall increase in mobile voice revenues. But well have another look next summer, and see what happened. Well be back... Contributing columnist Guy Kewney has been irritating the complacent in high tech since 1974. Previously with PC Mag UK and ZDNet UK, Guy helped found InfoWorld, Personal Computer World, MicroScope, PC Dealer, AFAICS Research and NewsWireless. And he only commits one blog—forgiveable, surely? He can be reached at Check out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.


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