Excellent Ofcom action on mobile call termination, but the regulator should do more

This is a follow-up to Lisa’s post below.

Whilst almost everyone in the communications regulation sphere is talking about the phone-quiz scandal, Ofcom yesterday quietly released a massive regulatory statement on mobile call termination (MCT). It’s 411 pages long, but the best thing about it is that Ofcom really gets to the heart of the problem: consumer awareness and incentives. Ofcom write:

Overall it appears that the attitudes of the residential mobile subscribers of each of the five UK MNOs towards the cost of others calling them is not a major consideration in their choice of mobile network. Therefore, in Ofcom’s view, these subscribers do not impose a competitive constraint on the termination charge, since they are unlikely to switch to networks with cheaper termination charges. Looking forward, and assuming that the CPP arrangements persist in the UK, it is difficult to see why mobile subscribers may become more sensitive to the cost of others calling them and begin to offer a competitive constraint to termination charges.

I thought Ofcom’s regulatory statement was excellent but it can do more:

* Publicity. The passthrough of these off-net fees is one of the bigger consumer rip-offs in the U.K. I’ve previously seen estimates of 10 GBP per month per consumer. I wonder what the amount is today? No matter what it is, it dwarfs the amounts lost by people ringing Richard & Judy looking for that free 2-night stay in Benidorm. Ofcom should publicise this issue more. It’s certainly a complicated issue, but Ofcom have the credibility and expertise to responsibly raise the profile of this issue beyond where it is — today it’s mainly an issue for those that follow telecoms regulation. It’s great to see Ofcom impose a downward-sloping cost structure in a regulatory proceeding, but really helping consumers also means the regulator should do some consumer outreach.

* Move toward bill-and-keep. Because each network benefits tremendously by being able to charge its own customers for access to the entire worldwide telephony network, the concept of ‘costs’ to terminate a call seems outdated and more suitable for an era when it was just a state-owned monopoly terminating calls originated by foreign operators. Bill-and-keep operates under the principle that — whilst there might be some cost associated with terminating a call on your network — that cost is more than offset by the advantages of being tethered to the larger network. Under bill-and-keep systems, the cost to terminate traffic on networks is recpirocally set at zero. It’s like having a mate with a place in the Cotswolds and you have a place in Covent Garden — you sometimes swap… and sure you have to clean your place before the swap but so does your friend!

* More disclosures to consumers. Being somewhat transatlantic, when I am in the U.S. I carry a pay-as-you-go mobile from Cingular. My outbound calls are free to other Cingular customers. My off-net calls to U.S. domestic numbers cost 10 U.S. cents a minute. Here’s the cool thing: as soon as you disconnect from a call, Cingular immediately texts you the price of that call — so at least you know whether the call was off-net and what that call just cost. Why don’t U.K. mobile companies offer a similar service? Ofcom should explore this and similar technical means of ensuring that consumers get better access to information about call costs.

Nobody has a problem with mobile companies making money — it’s just the factual circumstances of this particular marketplace setting really work against consumers.