Termination Charges Come Under Attack

Opinion: Fearing that regulators will expose high network charges to the public, phone companies will scramble to offer new deals.

What do phone company managers dream about?

Terminators. Not good dreams.

I know exactly what these nightmares are. They involve regulators. Horrible, fierce regulators with multiple language qualifications, legal knowledge and the full billing details. And whats the worst thing that could happen with phone company billing details? Yes!—they could be published.

Thats exactly the threat that is looming now.

Its quite a scandal brewing. We got the first signs of what is coming in the European market when the Hungarian regulator levied a fine of nearly $700,000 on T-Mobile—for overcharging. It didnt overcharge the phone users; it overcharged the other networks.

The thing is, termination charges are the big scam of the European telcos. And none of the phone owners has a clue how bad it is.

I honestly have no idea what I paid for the last phone call I made. And I bet you havent either—but, of course, comparing phone charges in London with phone calls in Los Angeles is the sort of exercise only an idiot—or a regulator—would attempt.

By European standards, the American phone market hasnt actually opened up. My American friends find it hard to believe, but it really is the case that there are more mobile phones in Europe than people. Which means that the billing structure is a nightmare.

Specifically, it is about to become a nightmare, because the regulators have finally caught up with the phone companies.

It hasnt been a month since all the network operators were buying each other trebles all round, because the future was all "prices going up." Weve had a season of throat-cutting competition, just to keep the customers from leaving one network and going to another—or, if youre the other network, to make the customers leave one network and come to the other.

/zimages/1/28571.gifClick here to read more about the accessibility of telco pricing information.

And finally, with Spanish operator Telefonica contracted to buy O2, they thought, "Its all over! We can consolidate, and stop cutting prices!"

Fat chance. The Hungarian move is the first. In the United Kingdom, the regulator is Ofcom, which—to the total astonishment of everybody—turns out to have gotten someone who actually understands technology and phone billing systems.

That was a shock, because in the United Kingdom, the regulator is mostly concerned, these days, with upholding complaints about whether a TV entertainment should represent the personal lives of Prince Charles and Camilla as if they were human beings. If they were humans, theyd probably (shudder) touch each other affectionately in private. Cant show that on the BBC. Call Ofcom.

Well, that was how most of us saw the new team of Ofcom; that view turns out to have been oversimplified, and the whole of Europe is about to impose the worst possible punishment on the Terminators: public exposure.

Next Page: The secrets of telcos.