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September 18th, 2009Why do we pay for incoming calls?

Posted by Editor in Carriers, voice

From the WirelessNorth submission engine, Andreas writes:

Subject: Incoming Calls are paid(??!!!)

I just arrived in Vancouver from Europe only to find out that in this part of the world you have to actually pay for your incoming calls! And on top of that you get to pay over $30 for a mere 100 min. I thought it was a joke but it turned out it is true.

It is important because people should know that is not the way it is done in developed countries since 1997.

Not only that Andreas but some carriers will charge you long distance fees on top of that even for incoming calls.

Why is this? Well our understanding (but internet please correct us we’ve got this wrong) is that the difference in europe is that carriers pay to each other (and earn) termination fees for incoming calls landing on each other’s network whearas in North America this doesn’t happen (due to the legacy of free local calling on POTS. So in europe the carriers have incentive to encourage incoming calls while in North America it would just be lost revenue opportunity to give away incoming. That being said, a lot of the carriers do offer some kind of free calling plans to numbers on the same network, or some clever folks out there hang on to legacy plans that do offer unlimited incoming.

Hint: free incoming, if you can get it, is a great thing to combine with a service like Jajah that acts as a clever middleman to turn all your calls into a local incoming callback.

  • Hubert Figuière
    The thing that people don't realize is that calling a cell phone from a land line in Europe is worse than a racket. The incoming call you have to pay here in North America you end paying less than in Europe.

    The cell-phone provider will have more incentive to reduce that incoming cost for cell-phone owners (their customers) than in Europe for people who don't really have the choice of the tariff when calling somebody else cell-phone.
  • CharlesT
    A question about Jajah (and similar services):
    If I'm not in my local calling area, dont I pay for the LD on the incoming side?
    If that's the case (and I believe it is), then an alternate call-through service like JustDial.ca is more cost-effective when making LD calls from outside of one's local calling area.
  • CharlesT
    In Europe POTS was traditionally managed by the country's PTT (Post Telephone and Telegraph) which was either a government ministry or the equivalent of a Crown Corporation. So for a call to cross carrier boundaries, it needed to cross borders, in which case the call was a long distance call. All carriers, including North American carriers, had (and still have) commercial agreements to compensate each other for the cost of carrying long distance calls not originated by one of their subscribers (including calls transiting through an intermediate carrier). And until deregulation allowed local POTS competition, all local calls were always terminated on the same carrier on which the call was originated. What some European countries had was the concept of "local measured service" i.e. local POTS calls were not free and Europeans payed a lot more for their phone service than North Americans.

    The situation is reversed for wireless services: we, North Americans (and Canadians in particular) pay a whole lot more for wireless services than just about any place else in the developed world. Why? and why in particular are we charged for incoming calls? Because of weak competition. In my opinion, this weak competition is mostly enabled by the fact that cell phones are bundled with and locked to a given carrier. In Europe, cell phones are not locked to a given carrier; to change carrier, simply change the SIM card and keep your phone if you want to. In Canada, changing carriers means changing phones; if you want something else than a basic phone, you are faced with an up-front expense of a few hundred dollars and a 3-year contract (2-years in the US); if you try to buy the phone outright, you pay an inflated price for it since the carrier has a monopoly on the phones that work on his network AND you pay the same fee for the service!!!

    Imagine how different the situation would be if you could buy (and sell) your phone independently of the local carrier! You could buy the phone YOU want and use the service provider YOU want with the level of service to meet YOUR needs. Unfortunately, this is unlikely to happen for as long as there are incompatible cell phone technologies such as CDMA and GSM.
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