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Cell phone rates remain high October 30, 2007

Posted by grhomeboy in Telecoms.
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The cost of cell phone usage in Europe recorded a drop of 20 to 30 percent in the period 2002-2006, according to a survey carried out by consulting firm Teligen on behalf of the European Commission.

The largest part of cost reduction was achieved in 2004 and after. However, there are still significant variations in prices for mobile phone usage across the continent. Denmark, for instance, is a veritable heaven for mobile phone users, as the monthly cost ranges between 7 and 17.60, compared to Germany where similar packages range from 22.60 to 75.30. Greece is somewhere in the middle, with packages ranging from 20.90 to 48 per month.

Data provided by the EU, in the Report on Telecom Price Developments from 1998 to 2006, show that specifically in Greece low-usage packages range from 20.88 (Cosmote 60, SMS30) to 22.98 (Vodafone 10); medium-usage packages cost between 27.71 (Cosmote 120, SMS 60) and 28.58 (Vodafone 100, SMS 50); and high-usage packages cost between 41.78 (Cosmote 240, SMS 60) and 48.21 (Vodafone 200, SMS 50).

Based on the above data, it is clear that Cosmote offers cheaper packages compared to Vodafone. Wind Hellas was not included in the survey as Teligen collected data from only the two largest players in each national market.

A catalyst for the reduction of mobile phone costs across the EU is generally considered to be the regulation of the market. National regulating authorities, urged by EU decisions, are imposing lower charges on mobile networks in an effort to balance out their difference with fixed-line networks.

This particular issue was discussed during a recent meeting in Athens on October 11, of heads of regulating authorities and relevant proposals are soon expected to find their way to the decision-making table.

Nevertheless, the European Commission appears to be in favor of a reduction in costs, with Vivian Reding, EU commissioner for information society and media, having recently said that the appropriate tools will be given to regulators for this purpose. “I know that many European regulators are working systematically on a joint approach of reducing mobile phone costs,” Reding said. She added, “I would support such an approach with all the tools at my disposal, with the main target being not to harm competition.”

A key element in mobile phone costs is the terminal fees charged on mobile networks. The terminal fee is the amount paid to the telecommunications provider on whose network a call is terminated. The fee is collected in the form of a bill by the provider of the network from which a call is made, and is then paid to the provider of the terminating network.

For many years, terminal fees on mobile networks have been many times higher than the corresponding terminal fees for fixed lines. In October 2006 for example, the termination of a call on Vodafone’s mobile network cost 0.125 per minute, while a call terminating on a fixed line network, such as the one operated by OTE telecom, during the same period cost 0.0086 per minute.

In the past, such costs used to be even higher, with the terminal fee costing more than 0.20 per minute. In 1993, when mobile telephony was introduced in Greece, terminal fees then amounted to Greek Drachmas 120 (about 0.40 euros) per minute.

The growth of mobile telephony in Europe has, to a certain extent, been funded by the high terminal fees paid by consumers. However, now that mobile providers have grown into robust companies, the terminal fees are dropping significantly, with the help of decisions made by regulating authorities.

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