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Mobile Termination Rates & Why They Don't Matter

In the short term the big winners here are Three and British Telecom. As Three CEO Kevin Russell said at the start of the Terminate the Rate campaign: "When this happens we will be able to provide flat rate, unlimited calling offers which include numbers on any UK network. This will give consumers real freedom." Russell speculated that Three could provide unlimited cross network minutes for less than £35.

The reality could be radically different, at least in the short term. Whereas Three will save a fortune, Vodafone, O2, T-Mobile and Orange will lose one. Their profitability will drop and they are likely to try and keep pricing the same or - as the Everything Everywhere spokesperson expressed - potentially cut the cheapest pre-pay tariffs. The result being the elimination of anti-competitive behaviour could hurt the poorest members of society.

The upside is Three is unlikely to let that happen. Stripped of much of its MTR burden the network will be able to offer much cheaper tariffs yet still improve profitability. Its rivals can huff and puff all they like, but if they don't want to quickly lose market share they will need to respond with similarly good deals - especially since Three tends to be the cheapest network in the first place (it has to work on much lower profit margins to compete).

Protecting a dying format

So Three is the hard done by little carrier fighting for justice and all its rivals are big bullies? To an extent, but before we all get too sympathetic it is important to remember this: all carriers are evil.

The reason for this is because they all face a bleak future. That of becoming little more than a mobile ISP or 'dumb pipe'. Face it in an age of data we don't really need 'minutes' we need gigabytes and gigabits. Gigabytes of data allowance and gigabits of network speed. Data is like stem cells, it can be shaped to do anything. With it we can make high quality calls, send instant messages, surf the Internet, eliminate the entire concept of MTRs and roaming rates. For years carriers have been fighting this evolution tooth and nail and trying to come up with their own pointless alternatives. They know their stand is destined to fail, but they don't expect to win, their goal is to stall and stall and stall. Again Three is better than others when it comes to accepting the future, though no-one is guilt free.

Losing the battle, losing the war

So while the MTR decision is a victory against anti-competitiveness and will eventually lead to better consumer deals, it is only a victory when fighting the wrong war. Don't be distracted by minutes and texts, reduced roaming rates, family and friends deals and evening and weekend call times, none of this should exist by now.

We must cheer Ofcom's decision today, but we'll cheer far louder when carriers are finally reduced to dumb pipes.

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