Had an interesting meeting with Rebtel this morning that set me thinking about interconnect fees to fixed and mobile operators. I have a suspicion that the model is broken.
At the moment, the cost of terminating a call to a mobile number (07xxx in the UK, for instance) is much higher than to a fixed geographic number (020 xxx for London). This is rooted in the idea that mobile operators' costs are much higher (spectrum, radio network etc) and that therefore they deserve a hefty premium (maybe 10x the fixed-telco price) for the privilege of transferring another operator's call to one of their end customers. So maybe terminating a call on fixed-line costs 1p per minute, but it's 8p on mobile (roughly speaking).
This is the reason that fixed-to-mobile calls are much more expensive than vice versa. Terminating SMS's is also quite expensive, for similar reasons.
(note that in the US, there is no differentiation between fixed and mobile numbers - this doesn't apply).
Up to a point, this is all fairly reasonable - after all, mobile operators' overheads are generally pretty high, if you include the cost of spectrum & infrastructure.
But the model breaks down in two ways:
- firstly, if a VoIP service provider gets a mobile number range (& therefore the interconnect revenues for inbound calls), but uses a cheaper way to terminate the calls (eg WiFi).
- secondly, if a mobile provider uses its own mobile numbers for services that don't use the expensive spectrum and infrastructure (eg also terminates on WiFi via UMA/VCC, or alternatively uses mobile numbers for fixed-VoIP offers like softphones).
In either of these instances, the whole "moral basis" for supposed mobile 07xxx numbers to have more costly interconnect than fixed geographic numbers disappears. While there's a justification for a mobile premium when using a complex mobile network, the justification evaporates if the only difference is the number of the endpoint & the call routing.
(interesting side comment here by the CEO of Rebtel - if the call terminates on a voicemail server rather than an actual cellphone, is the costly interconnect fee still justifiable?)