Curious Snippets

I do not normally normally exercise my calloused fingers at this time in the evening, but feel compelled to share a painful experience. I have just finished watching the most exceedingly nescient so called documentary ever produced. Channel 4's Dispatches: The Mobile Phone Rip Off was rage inducing to say the least, and made me want to dispatch the reporter in the most torturous of methods!

I longed for the surely less painful sensation of melting my corneas with sulphuric acid, but alas forced myself to endure Antony Barnett's nauseating and economically illiterate diatribe against the mobile phone industry.

Let us feign absolute horror at just a few of his discoveries...

1. Carphone Warehouse and Phones 4u earn commission for selling mobile phone services and will try and sell customers contracts of higher value to earn more!

Can you believe it? The audacity.

2. Mobile operators have left customers high and dry when the little independent retailer they brought their contract through, and who offered them cash-back, went bust, leaving them with unaffordable contracts.

How dare the big mobile companies with their millions and billions of profit toss aside little Mildred just because the small-time retailer with whom she made the deal went bust? Their logo is on the phone, ergo they must be responsible somehow.

3. Mobile companies charge high rates for roaming abroad, despite the cost being far less.

Wow. No shit Sherlock. It is called market segmentation. If the mobile operators can earn a little extra from customers making calls abroad, where their margin is reduced from paying the roaming partner a fee for carrying the call, then how dare they charge the user more?

Viviane Reding, the EU Crusader Commissioner for Justice Information Society and Media even said how Margaret Hodge, the then minister for the industry, stood up for the mobile companies in the face of Brussels attempts to cap roaming charges. Viviane even phoned her to "back her up", telling her "how British consumers would not look favourably on her government for [being ripped off]". Get that? An unelected EU Euro-bitch piling pressure on an elected government minister on an issue which affects British consumers. Fucking priceless [but ironically at great cost]!!!

British consumers who do not travel abroad will just love having to pay extra on their domestic bills to make up the shortfall! Apparently landline phones, international calling cards, et al, just don't constitute competition in the eyes of Viviane and the Dispatches 'reporter'. I guess the fact that mobile phones are themselves providing competition in the marketplace as a whole is overlooked while our meddling EU Commissars Commissioners drag their noses from the trough to stick into business which isn't theirs.

4. The mark up on a text message is about 90%

And? Your point Anthony? You see, a mobile phone network is an infrastructure, meaning there is a very high capital cost to build the network, then the gross margins of services offered over it are very high. This money allows the operator to generate a return on investment and finance network upgrades to new technologies and services. All very clever really. I rather think Mr Barnett might struggle to understand the economics of burger flipping, though, an occupation to which, incidentally, he may be better suited.

Not only did he revel this shocking information, he also did a little comparison. He found some bloke at a space centre who calculated the comparative cost of getting images from the Hubble Space Telescope vs sending a text message. The 'discovery' was that on a per Mbyte basis the cost for a text message was several times greater. But then I guess the fact that the two are in no way comparable at all is irrelevant. Hubble will send the data to a ground station over a private link (I am guessing) where as a mobile network must be constructed to cover the whole country at a cost of £billions before even just one text message can be sent. Now why don't we compare apples with oranges? Oh, already done that!

5. Termination charges are ripping of consumers

Termination charges are pain when an "off-net" call comes on to the network, e.g. an O2 or BT landline user calling a Vodafone customer. But if the operators were to scrap these charges then the cost is not just eliminated from the world. The shortfall has to be made up elsewhere, and if you remove the number of tools at the disposal of operators to compete and differentiate, then the cost falls more transparently on all our bills.

You see, the new 3G mobile operator, '3', launched in 2003 from a standing start. It had no legacy customer base. Hence its users would make a disproportionate amount of calls off-net to other mobile operators and landline operators. Ofcom thus allowed 3 to charge a higher termination fee, since the converse of this is that there would also be a disproportionate number of inbound calls. Thus it helped a new operator get established and increase overall competition in the market.

Ofcom says this of call termination rates "However, termination charges form a significant proportion of mobile operators’ revenues (for example, around 15% in the UK). Mobile operators argue that one of the reasons for the difference between termination rates charged by fixed operators and by mobile operators is the higher investment and operational costs in running a mobile network"

6. Now the greedy capitalist bastards are pushing 3G data services which will provide more ways for them to extract our money

Righhht! So they pay £22.5bn for licenses, plus network build costs, plus operational costs, plus maintenance costs, towards a 3G network. They then sell services which consumers want, and this makes them evil. How so, oh wise one?

The whole programme is so appallingly horrendous, and showcases the most lamentable journalism, research, and woefully ignorant levels of understanding of even the most basic of concepts, it deserves to be widely derided and discredited. There will be many a mobile executive tearing their hair out at Mr Barnett's brazen stupidity. Let us hope, for our own sake, that he never breeds.