3 berates mobile regulation

Mobile operator 3 is calling for speedier regulatory change to stop consumers being ripped off by high mobile and roaming charges and cumbersome number portability processes.

Speaking at a regulatory roundtable event in London this morning, Kevin Russell, the company’s chief executive, made no bones about how he feels about current charging models.

“As a new entrant you struggle to get access to cell sites. We’ve ticked that box as we signed a network sharing deal with T-Mobile. The [other] challenge for new entrants is regulatory,” he said.

“[It occurs through] a series compromises between the regulator and the incumbents over several years. That’s generally not necessarily the most favourable position from a new entrant’s standpoint…”

This led Russell to the issue of mobile termination rates (MTRs) – a subject he is clearly quite passionate about. While it costs operators like 3 literally peanuts to pass on voice calls and texts, the costs they are forced to pay to transfer traffic ramps up the rates consumers are ultimately charged.

3UK pays six pence per minute for voice calls and two to three pence to transport texts in this manner, although the actual network costs involved are orders of magnitude lower.

Russell estimates that 3 has paid out around £190 million to the incumbents as a result of this subsidisation. And he reckons that fixed line subscribers subsidise the mobile industry to the tune of £1 billion a year.

“When this starts to have an impact on you financially is if the cost you pay to the incumbent operators is significantly out of line with actually network costs… The new entrant ends up subsidising the incumbents. We think this is unfair and bad for competition and needs to be addressed,” Russell added.

“There is a significant UK consumer impact as well because termination rates set an artificial floor to pricing.”

Russell put forward two possible solutions to the situation: MTRs of less than a penny, or a so-called ‘bill and keep’ approach.

In addition to mobile charges, Russell also griped about the state of number portability in this country, adding that Japan moved to a speedy, two-hour system back in 1999, which was subsequently adopted by Australia in 2001 and Ireland in the last few years.

“In the UK we don’t have this in 2008 and we won’t have this in 2009. It’s not rocket science,” he said.

“It should take the time that you take to have a cup of coffee [to port your number]. By the time you’ve finished the coffee you should have the new service. The rhetoric has been ‘We support number portability, we just have to get the costs right.’ To me, that is a nonsense.”

Spectrum re-farming and was also thrown into the debate, with Russell arguing that there should be another auction to level the playing field.

EU data roaming charges also had their spot in the limelight during today’s discussions with Russell suggesting that it’s ludicrous that you can get 5GB a month in the UK for £15 but that 5GB would cost you £15,000 in Europe if you roamed and used it in the same way.

“The rhetoric that comes back is that this market is too immature to regulate. I think that this is absurd,” he said.

“This goes to the heart in scaring consumers senseless to not use data services.”

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