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Jason Pollock

Actually, there is at least one mobile network (that I know of) that doesn't own any spectrum, or operate any base stations - Truphone. So, it is entirely possible for Google to operate in the same fashion in CPP areas.

Although T-Mobile keeps trying to have Truphone ruled something other than a mobile network, they haven't succeeded yet.


Christian von der Ropp

The effort Google has done with Google Voice is quite impressing and I would love to see their service here in Europe. First I thought it could be realized here through mobile numbers from a MNO or MVNO, who earns enough from incoming calls in order to recover the costs of external forwarding/termination.
But the different billing models are not only an economical problem, but also a legal one: In Europe we have a so called "cost-based regulation", which means regulators fix termination fees at a level that will cover operators' costs for terminating calls in their very own network. As soon as an operator can afford paying external termination from their own termination income that would imply that there's a surplus in termination income, which exceeds the actual own costs. Since the MNO's/MVNO's (cellular) network wouldn't be used for outgoing calls, one couldn't bring forward the argument, that external forwardings are cross-subsidized by the income from outgoing calls. This would certainly cause regulators to lower termination fees.
I fear in Europe Google Voice could only be realized by charging users for all forwardings or through premium rate numbers, which would both cause low acceptance, or as an integrated feature of a real mobile phone service (including actual cellular network usage).


Martin, there is strong evidence that the delay in US adoption was not due to RPP vs CPP. There's also quite a bit of emerging evidence that CPP only results in a regulatory quagmire, high mobile costs and low average minutes of use. This post: http://blogs.nmss.com/communications/2006/05/yet_more_on_cal.html
points to an interesting paper by Prof. Stephen Littlechild as well as to an earlier post with an argument between Tomi and I that you might find interesting.

David Boettger

The arguments in favor of CPP continue to baffle me; they seem to be willfully devoid of logic. The only defensible argument in favor of CPP is that it drives up carrier revenues. Why? Because carriers in CPP countries effectively ransom phone numbers: Want to reach my subscribers? Then you have to pay whatever I ask. I laugh when I hear people attempt to portray CPP as somehow more egalitarian than mobile party pays (MPP), given that it only serves to (a) line the pockets of carriers, and (b) transfer the costs of a service (mobile telephony) from the beneficiary to a blameless party (i.e., everyone who calls the mobile party). Hardly egalitarian. And ever wonder why European regulators have to be involved in the issue of "interconnect rates" whereas they don't in MPP countries?

To the Ahonen points:

- CPP "incoming calls are free": Nonsense! SOMEONE has to pay. It's just the poor sap who calls the mobile party, rather than the mobile party himself.

- MPP "makes the mobile operator charge mobile users": Is that not where the cost burden rightly belongs?

- MPP "keeps many people from getting a phone": This is complete and utter hogwash. Singapore and Hong Kong have been well over 100% penetration for years (can that be said of Europe?) Even China is approaching 50% penetration -- that's 600+ million users, almost all under an MPP regime.

- "Mobile adoption in the U.S. is still far behind": Wrong. The U.S. has nearly 100% penetration: http://public.cenriqueortiz.com/images/us-wireless-subs-market-dec-2008.jpg

- With MPP there is "no incentive to increase coverage and capacity since the terminating network is not getting paid": Calls are ALWAYS paid for; it's just a question of who pays for them and how. Does Mr. Ahonen think that calls made under a flat-rate plan are not paid for either?

What dis-incents U.S. carriers from improving coverage and capacity is the large buckets of minutes that airtime is sold in. Once the carriers have convinced you to pay a monthly fee for your monthly bucket, what they REALLY want you to do is never make a single phone call; after you pay your money, you represent nothing but cost to them. One way to minimize this cost is not to provide subscribers with overwhelming coverage and capacity. Consider, again, Hong Kong, Singapore, and China which do employ MPP but don't sell minutes in big buckets. I can't remember a single time in the past 10 years in which I experienced a lack of coverage in those places.

If there were ever a poster child for how CPP retards innovation, Google Grand Central is it. The question is not whether the US should adopt CPP, but when Europe and Asia will abandon it.

Rick Beveridge

If you had to pay every time someone gave you a bunch of flowers, or delivered junk mail, would Interflora or UPS exist ?

Jason Pollock

Actually, I think if you look into it, CPP vs B&K have no effect on payments between carriers unless the traffic is asymmetric. So, for normal P2P contact, you will call/SMS them, and they will call you back, resulting in a net-0 payment between carriers - even ones of unequal sizes.

The only difference is for services where the traffic is asymmetric, such as call centers which receive a lot of calls and SMS ASPs, which generate a lot of SMS traffic.

CPP results in SMS ASPs having to have connections to each carrier. This is a huge barrier for new entrants into the market, since they cannot poach the profitable ASP business.

We also see the effects of CPP on the "free dial-up ISP" model, where the transfer payments from the incumbent telco more than made up for the cost of the ISP service. This is the same as the free long-distance and conferencing services operating out of Iowa.

The payments the individual users make are independent of the termination charges.

David Boettger

@Rick Beveridge | March 20, 2009 at 05:03 PM

Your analogy seems to be that CPP is necessary for the commercial viability of carriers. Given that the two largest mobile markets in the world employ MPP, and that the carriers in those markets generate enormous volumes of cash, it would seem that this is not the case.

David Boettger

@Jason Pollock | March 26, 2009 at 09:35 PM

"CPP vs B&K have no effect on payments between carriers"

Traffic is bound to be asymmetric between carriers, roughly proportional to the size of each carrier's subscriber base.

But the point isn't really whether CPP is fair to cellular carriers, but whether it is fair to all calling parties: cellular, PSTN, or internet. Calling mobile phones in the US costs 2.1 cents/minute using SkypeOut. The same call to a mobile phone in France costs 20.3 cents/minute -- because mobile carriers in France can charge whatever the like with impunity. Retail is where the unfairness of CPP is most evident. Indeed, why did SMS take off early in Europe? Because CPP makes calling mobile phones expensive.

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