Tuesday, September 9, 2008

Vodafone gain support for stance on termination rate cut proposals

Mobile news reports...

Orange and T-Mobile stand by Vodafone's rebuttal of European Commission's proposed termination rate cuts of up to 70 per cent. Termination rates are the charges levied for using your phone abroad - also referred to as roaming charges.

3 Mobile has branded Vodafone's submission to the European Commission rejecting significant cuts to mobile termination rates as "scaremongering".

But other networks have supported Vodafone's stance and even suggested handset subsidies could disappear if termination rates are cut too low.

Vodafone said it wasn't against reducing termination rates – the fees networks charge each other to connect calls across their networks – but it disputes a call from EU telecoms commissioner Viviane Reding for reductions of up to 70 per cent.

The network also said the reduction envisaged by the EU would make it difficult for networks to recover their costs and could lead to the adoption of a US-style mobile market model of 'bill and keep', where customers pay to make and receive calls.

It claimed there were around 40 million mobile users in Europe who would then be prompted to cull their mobile usage. According to the bill and keep model, users spend an average of €15 per month, but according to Vodafone, these 40 million European users currently spend less than €10 per month.

Alternatively, networks would have to raise their retail charges to recover costs.

"We are not against prices coming down, but if the EC brings these cuts in the time frame they are suggesting, operators will have to recoup these costs somehow," a Vodafone spokesman said.

Read the full story here.

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