Termination rates and margins

, posted: 5-May-2011 16:13

I see that TUANZ is err, calling for a national day of calling which is a big call although I wish they had called it something else.

The media release says this amongst other things:

The Commerce Commission has reduced the termination rate for a voice call from around 15 cents per minute to 7.48 cents per minute from today.

That means any company offering calls to a mobile phone now pays the mobile phone company nearly 8 cents a minute less than it did yesterday.

A reduction of eight cents a minute isn't to be spat at, but it's not really that much, is it? Not when telcos charge 49c, 69c, 79c or more per minute for voice calls.

Maybe we should look at this proportionally instead? The margin between the termination rate and the retail charge is enormous. There's no other word for it. On 49c/minute, the margin to the 15cpm termination rate is 327 per cent. It's much more on the more expensive retail rates.

Let's be generous though, and leave the telcos with their huge margins but base them on the new termination rates.

Now that the termination rate is 7.48cpm should the retail rate not be 24.4c/minute, assuming the same 327 per cent margin? Isn't that reasonable?

Other related posts:
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Yes, this iPod still works
Samsung Galaxy Tab so good Apple wants it banned?

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