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Saturday, May 26, 2007

Customer perceptions of value - domestic vs international calls

Most people believe it's cheaper to make international calls from a fixed-line or VoIP phone/PC than a mobile. Certainly, circuit-switched direct international minutes usually lie outside a user's bundled minutes, and are tariffed accordingly, often at premium rates.

So it's interesting to see a couple of operators in the UK go against this paradigm and start bundling international calls into their basic voice plans, obviously routing them via a VoIP gateway in their networks. (These calls are typically to fixed-line numbers, plus mobiles in a few countries like the US that don't distinguish between interconnect rates or numbers for fixed/mobile inbound calls).

T-Mobile has been advertising that business users can call abroad without extra charges. And yesterday I saw an advert in a 3 UK shop offering the bizarre combination of "500 UK minutes and 3000 international minutes for £30 a month".

This is sort-of reasonable at one level, as we in the industry understand the economics of VoIP for international transit, and interconnect fees for mobile. But at another level, it really highlights the ridiculously high costs of normal domestic mobile telephony to the average user. While we sort of knew it already, 3 is basically pointing out explicitly to people that's it's cheaper to call Granny in Australia, than your mate next door, from the same device, while you are mobile.

Now obviously calls to most international mobile numbers will cost a lot more - and it could be that 3 is banking on customers spending a bunch of extra money on this to make their business case work.

These approaches also compete with the emerging class of mobile-based VoIP gateway services like Jajah and Rebtel and a million others.

Mind you, it'll be interesting to see what happens if you make a call that's supposedly "international", but terminates on a US-located SkypeIn or similar number that calls back to the UK....


Anonymous said...

Completely wrong.

Nothing to do with VOIP gateways.
A quick call to T-Mobile confirms, that outgoing international calls are covered by the allowance in their Business One-Plan tarrif. The Three offer is an add-on to regular tarrifs which costs an additional £15 per month. Theiy are currently running offers starting at £15 per month hence the £30 you quote.

VOIP gateways don't come into it, these are just acquistion offers. And incidentally anyone who quotes 3 and "business case" in one sentence in asking for humiliation.

Anonymous said...

On the whole calling abroad is cheaper than calling UK mobile. Mobile and Fixed Termination rates abroad are at similar (ish) levels to those in the UK. Therefore when the mobile operator blends its international call costs they are lower than the average cost of calling UK mobile because the cheaper Fixed termination element of the call cost brings down the average.

This is how some mobile operators can afford to include it their bundles.