High Termination Rates = High Profits = High Taxes/Income for Govt

Forums › Spark New Zealand (including Skinny and BigPipe) › High Termination Rates = High Profits = High Taxes/Income for Govt

tronco

12 posts

Geek

#37684 17-Jul-2009 11:12

Maybe I'm being a bit cynical, but don't high termination rates work in the Govt's favour by giving them extra revenue through increased profits and therefore increased tax revenue? It's not in the governments interest to regulate these down at a time when they are expecting serious budget deficits.

All of this comes at the cost of the consumer. If they were honest about it, the termination rates would be dropped and we would pay higher taxes (same could be said of power prices, but that is another story/forum).

Does anyone else see the twisted logic in this, or am I just being cynical?

NonprayingMantis

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#236416 17-Jul-2009 11:39

how do you suppose higher termination rates increase profits?

My understanding of how termination rates work (and I could be wrong of course - feel free to correct me if I am) is that it is a transfer between different carriers. i.e Telecom pays voda for each call from an Xt phone to an vodafone phone, and vice versa.

That being the case, doesn't that mean that every single MTR payment is simply transferring profit from one company to another and as such is a zero sum game for the industry as a whole in terms of profit (and therefore tax).

i.e. Any increase in profit from carrier A as a result of MTR receipts is a decrease in profit of the same amount for the carrier who made the MTR payment?

Is this correct?

tronco

12 posts

Geek

#236419 17-Jul-2009 11:52

Sure, but the rates are used for an excuse for high prices accross the board. What are the real costs of calls and txts withina network?

dickytim

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#236420 17-Jul-2009 11:54

not really, when it is caused by the consumer having to pay higher rates for the product/service. If the termination rates were lowered/raised but the price of the service was constant then you would indeed be correct as the end result would be turn over as apposed to profit.

NonprayingMantis

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#236434 17-Jul-2009 13:05

tronco: Sure, but the rates are used for an excuse for high prices accross the board. What are the real costs of calls and txts withina network?

they are? That is what 2d claims, but I don't remember seeing anything from Voda (who are the net recievers in the current market) claiming that the reason they charge more for offnet calls is because of MTR. Telecom used to charge more for offnet caling, but don't anymore, but when they did I dont rememer them saying that the reaosn was higher MTR pricing.

It would seem a pretty feeble excuse IMO becuase they are the ones who lobby the govt to keep MTR higher.

jpollock

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#236765 18-Jul-2009 21:46

MTRs are reasons to prop up the prices of their very profitable ASP and call centre businesses. It isn't the reason for high mobile to mobile charges. That's purely because people link MTR to end cost, which is pure baloney.

The only thing it matters for is for non-symmetrical traffic:

1) Dial-up ISPs
2) SMS ASPs
3) Call Centers
4) Other ASPs (conference bridges/etc)

Right now, you need a connection to each mobile carrier to deliver SMS'. If MTR was 0 for an SMS, you wouldn't need to connect to each one - only the cheapest one.

So, obviously 2d wants to poach that business from Telecom/Vodafone. It's very profitable and the last point where the number of people on-net makes a difference.

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