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Vodafone enters public spat with Ms Reding

Claims proposal will cause 40 million users to dump their phones
Mon Sep 01 2008, 11:37

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

See Also UK officially nation of mobile phone users


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