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Vodafone enters public spat with Ms Reding
VODAFONE IS having a very public spat over measures which infamous EU telecoms Commissioner, Viviane Reding, is intending to introduce. The company says she'd be to blame for 40 million Europeans giving up their mobile phones.
The fight is over proposals to introduce a US style system whereby cellular phone users actually pay to receive calls on their home networks – not just while abroad ('roaming').
Market Researcher, TNS, was asked by Vodafone to get 9,000 typical mobile phone users views on a range of possible price increases.
These results have been extrapolated by Vodafone to argue in a submission to Ms Reding – and conveniently leaked to the FT – that around 40 million EU mobile phone users would drop their phones.
The problem is that low income mobile phone users typically receive loads of calls but make very few of them. With the current system the mobile phone operators make their money by charging the caller's originating network a 'termination fee' for connecting the call.
Ms Reding would ideally like to see these termination fees reduced to nothing. The crux of the problem is the differing kinds of business models which mobile operators employ to acquire customers.
Many European operators heavily subsidise the cost of the handset. This isn't the case in the US. So applying a US model to Europe obviously has its flaws.
Vodafone argues that one of them is that those on low incomes will be hit by being charged to receive calls. Given the extraordinary low penetration rate of mobiles in the USA, Vodafone does seem to have a point.
Ms Reding's current popularity with EU consumers would also suffer if mobile call costs rise as a direct result of her actions. µ
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Receiving a call is beyond my control, why should I pay for something I didn't initiate?
The current setup makes perfect sense to me, Reding's just being difficult for the sake of it.
I lived in the US and worked for a phone company. Believe me - current European methods are much better. The US system was setup by the FCC to make mobile phones seem seamless to the phone subscribers: no different area codes dividing connections. (This has a few advantages.) But the system ends up being very, very costly and mobile phone subscribers pay for SMS messages. Which now leads them to pay for spam - at fairly high rates.

The current European system makes all phone charging the same: you pay to MAKE a call, regardless of what you connect to. The US system makes you pay for a call you make, IF it isn't a mobile phone at which point the receiver pays for it. Including wrong numbers, sales calls, and all messages!
Come on, it's a load of codswallop.

They will all put their prices up a similar amount, they know exactly already how it will work. It's simple maths, not rocket science.

If we have to reduce the charge at one place, then we increase it somewhere else to keep profits the same.
I really don't think you can compare business models over in europe to those in the US without first considering that the US has some very low population densities covering large areas of the country, thus making it very expensive to provide service to many parts of the states. This increased expense, naturally keeps adoption rates quite low, not so much the business model.

On another note, eliminating termination fees would probably wipe out 3... so it must be a good thing.
I agree with Vodafone!

This would certainly be enough for me to ditch my phone.

It'd mean that whenever I am out of credit (i.e. most of the time) I would be uncontactable and thus the phone would be useless.

Damned Eurocrats.