Voip Blog
The Pros And Cons Of Calling Party Pays
Friday, May 30, 2008
People outside the U.S. and Canada find it odd that we pay for both incoming and outgoing calls on our mobile phones. Conversely, we find it odd that it costs, say, 1.6 cents a minute to call a U.K. landline using voip.com's low rates, but it can cost up to 33.5 cents a minute to call a U.K. mobile phone!
The main reason for this difference comes from the calling party pays system that is prevalent throughout the rest of the world. There is no such thing as "free local calls" as there is in the U.S., which means the person calling must pay for the privilege of doing so. Incoming calls, whether you have a landline or mobile phone, are free.
While this sounds great in theory, what has happened is that the mobile network operators in the various countries have jacked up the termination rates to their network. This can make it expensive to call across the mobile/landline boundary, or even between mobile networks!
Because of these expensive termination rates, some people in calling party pays countries rarely make a voice call. They may, for instance, signal to someone based on the number of rings rather than complete a call. Or they may bypass the voice channel altogether and just use SMS, which is a lot cheaper than making a call.
In the U.S. and Canada, we have a wireless subscriber pays system, where inbound and outbound calls are paid for, in some way, by the wireless subscriber. While these rates were initially high, competition has driven the cost down to the point where the cost-per-minute is fairly low--low enough that it most cases, it is simply a non-issue. The cost to call landline to mobile or mobile to landline is the same. Unlike in calling party pays countries, the cost of calling a particular number rarely enters into the equation.The end result? According to the CTIA, the lobbying group for the mobile network operators, mobile phones are used more in the United States for voice calling. See their filing with the FCC for more details (warning: PDF link).
