We'll start today's Vonage news with their lower international rates:
United Kingdom 44 $0.02
United Kingdom (Cellular) 447 $0.22
Phew! A 1000% increase in price for calling a cell phone. Of course, it's not nearly as good as zero-cost VoIP, but landline calling is almost too cheap to bother cutting a bill for.
This price difference relates to an important behind-the-scenes part of the economics of telecom, which is how network traffic is peered. James Seng writes artfully about this as it relates to Internet connectivity. Somehow money needs to flow in the opposite direction to the bits.
The price differential here is that UK cellular subscribers are getting charged low prices to interconnect to the US phone network, but inbound calls face hefty fees. Furthermore, the end customer of a UK cellular network doesn't carry that cost personally.
As has often been noted elsewhere, the numbering schemes also help to drive this behaviour. In the US you can't tell a cellular and landline number apart, and the receiving party pays for incoming cellular calls. In the UK, cellular and personal services numbers begin 07xxx. The European SMS phenomenon is largely a consequence of high voice interconnect fees, which are in turn an effect of the regulated numbering system. The ubiquity of GSM phones and a determination to make children learn triple-tapping before they can daub their names in play paint are distant secondary causes.
Now, imagine you were a wicked telephone wanna-be oligopolist CEO stroking your groomed and oiled beard aboard the corporate jet. You are deep in thought, comtemplating the next way you're going to Zed your customer Gimps. Unfortunately those awful IP services that are undermining your closed telco products seem to have the wrong numbering system. Some fool didn't tie the IP address to the service provider or network! Oh, if only the first byte was the country code, the second the service provider, the third was the network type, and so on. Price discrimination would have been much easier. The fools! Anyway, we'll do what we can. Let's rewrite some of those peering contracts for our mobile data users. They can make outbound TCP and UDP connections under the old rules. But inbound need to be charged a premium. Unless your peer networks sign a deal, their customers can't initiate contact with yours without going through a metered telco gateway. You want to push the cost onto peers of your customer. And if you're the first mover, this could be a really sweet hidden little earner.
Of course, no telecom company is ever run this way. Ever. Really. Which is why calls to UK cell phones are so cheap. Not.
Posted by Martin Geddes at 2:15 PMTrackBack URL for this entry:
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