3 went head-to-head with rival networks on the issue of mobile termination rates last week.
3 UK chief executive Kevin Russell said: “3 is approaching half a million broadband customers. The market is exploding – the same with our Skype service and our messaging service.
“But we pay £190 million per year to subsidise other network operators as a result of the new termination rates, which have had the effect of increasing our payments to other networks, forcing our prices up. As a consequence, we have seen a 20 per cent fall in voice minutes on our network. However, our data usage is up 600 per cent.
“Mobile termination rates are a flaw in pricing. We can’t afford to go after fixed-line market in the way we want to. High termination rates are a legacy of a bygone era; wholesale termination rates are higher than retail prices.”
Backed by the European Commission (EC) and Ofcom, 3 put its case for further mobile termination rate reductions at a forum in London this week. T-Mobile, the GSM Association and industry analysts argued in opposition.
The debate followed the EC’s announcement earlier this month, backed by EU telecoms commissioner Viviane Reding, to bring in price cuts for SMS roaming and to continue to investigate the need for data roaming regulation.
Ofcom competition policy director David Stewart said: “The idea regulation has no role to play because of competition is not realistic.”
A BT spokesman added: “There is a need for more effective implementation and consistency of regulation. Competition is ideal but it is often not economically feasible so regulation is needed.”
Executive vice president of the International Telecommunications Users Group Nick White said faster regulatory action would drive the use of data services in the business mobility market. But Informa Telecoms and Media chief research officer Mark Newman said data was “fundamentally different” from voice and text and its market could not be categorised in the same way, which would leave him “surprised” if regulation was imposed.
GSMA chief government and regulatory affairs officer Tom Philips said: “The market is right to set the prices, not someone in Brussels. Data is a new market and services are already becoming cheaper. We want to encourage investment, not regulation.”
In defence of the networks, T-Mobile UK regulatory counsel Robyn Durie said there were reasons for the roaming rates, such as the fact data services are new and require preparation to ensure they work.
Durie added: “Prices are not coming down because Viviane Reding said they should, but because the market is starting to take off.”
EU’s Reding under fire
3 has made its support for roaming regulation loud and clear, in direct conflict with most of its UK rivals.
One UK network spokesman argued regulation could potentially flatten the market by stifling innovation: “Reding (pictured) would be better focusing on macro industry issues, such as how telcos could have less impact on the environment, than micro ones that pick on a specific element of a phone package in isolation.
“A homogenised market isn’t beneficial for customers. Competition, as well as increased usage, will continue to bring down data roaming prices.”
Another network source said her motives appeared to support her career, instead of the telecoms industry.
“Reding has carved out a high profile role as a consumer champion, sometimes to the concern of fellow commissioners. This has produced great headlines and the adoption of a future regulatory climate based not on evidence but crude levers of market intervention.
“Where there has been time for genuine political and expert analysis, proposals have been substantially changed before being approved.”