Ofcom move threatens pay-as-you-go model

advice_please_2

http://www.h-l.co.uk/shares/stock-market-news/company--news/archive/ofcom-slashes-mobile-termination-charges

"Telecoms regulator Ofcom has imposed an 80% reduction in mobile phone call termination rates, the charges one operator levies on another for handling calls from the rival's network. "

Can someone please explain this of the pay as you go market?

grumbler

MSE News: Calls to mobile phones are set to become cheaper

advice_please_2

Cheaper cross-network calls on the way as Ofcom cracks down on operators



Read more: http://crave.cnet.co.uk/mobiles/cheaper-cross-network-calls-on-the-way-as-ofcom-cracks-down-on-operators-50003145/#ixzz1IeANRMVJ


Does this not threaten the market, as it becomes unprofitable and costly? I'm suprised how cheap you can get a pay as you go phone, sim card ready to call from quite a number of stores, supermarket etc.

advice_please_2

grumbler wrote: »

MSE News: Calls to mobile phones are set to become cheaper

why is it called termination charge?

Buzby

Because the call is delivered (terminates) on a different network. In the same way a train 'terminates' at its destination!

Guys_Dad

Buzby wrote: »

Because the call is delivered (terminates) on a different network. In the same way a train 'terminates' at its destination!

So that's very clear, thanks.

May I see if I have it right?

The "termination charge" is actually the charge that arises for the duration when the 2nd network accepts your call ( i.e. it starts) till the time that you close the call, on the original network that you started on.

The termination charge does not actually come from your network, but they are the ones who bill you.

The new termination reduced charges don't apply if the 2nd network is overseas as, although they are the termination network, they are not covered by Ofcom.

The link provided make this all very clear and I quote

"As a guide, currently most UK operators are allowed to charge 4.18 pence per minute for calls terminating on their networks --
3 charges 4.48p -- but that will fall for all of them to 2.66p in 2011/12, 1.7p in 2012/13, 1.08p in 2013/14, and 0.69p in 2014/15.

Each year's rates kick off at the start of April, hence the dual-year details.

Note, these aren't the prices you'll be charged per minute to call mobile phones, just the maximum termination fees."

So, the termination charges can fall, but that does not mean that the charges to you will fall by the same amount. But only when you arrive at Kings Cross, unless you have a PAYG?????.

Think I understand.

Well, glad all that's clear now. :beer:

KimYeovil

But none of that answers the original question - how will it affect pay-as-you-go customers?

I would assume it will not change much. Even if pay-as-you-go prices go up by 50% the low users will shrug and have to buy a tenner top up every three months instead of every six months. Not-so-low users can purchase a £10 per month contract instead.

seaniboy

More people will become payg as networks save on handset subsidies, the incentive to sign into a term contract 4 a free or cheap high spec mobile, it's a model where the majority of consumers and networks gain, lower costs 4 both.

MisterBrico

It means everything mobile wise becomes more expensive, some networks make slot of money off of these and now it will be dropping they stand to lose slot of income.

In mobile magazine I read O2 could lose 15% of their income (about 1/3 of uk mobiles is on O2) so other costs are sure to rise.

For example, the payg rate went from 20 to 35p a min at end of march

The real winners here are fixed line operators, and while bt save 4p a minute on mobile rates do you think they will pass that saving to us? So really Ofcom have passed the profit from mobile to fixed line operators with the main losers been the mobile customers!

4$£&*(£$&*(!

Ofcom are useless and I hope they get scrapped. It is their intervention that causes more problems than solves in cases like this. The networks will generate their revenue elsewhere, they will penalise customers and Ofcom won't do anything about it. There will be no detriment to the networks at all from this announcement mark my words.

I still cringe at how a so-called 'regulator' deregulated the 192 directory service that cost 40p for two numbers and now costs goodness only knows for the initial connection plus however many £££ per minute plus a connection fee if you want to be connected or a charge to get the text over to you etc etc. An equivalent service to the one 10 years ago could easily cost a couple of quid after the regulator got involved.

I have to get involved on occasion with them for spectrum purposes and they can't even do a good job on that. Bring back OfTel and the RA.

Im_just_careful

Assuming the direction of calls is approximately balanced (incoming call volume = outgoing call volume) then this seems to me to have no effect for mobile to mobile calls.

Fixed line to mobile COULD become cheaper, which reduces income to mobile operators but I suspect this is a modest proportion of their income.

In many respects, PAYG is the most "honest" form of mobile phone charging as the handset subsidies are generally lower, so I see no reason for PAYG to be impacted by this change. Also it doesn't rely on the usual mobile industry trick of selling people things they don't generally use (lots of "free" minutes which don't roll over month to month).