a mARTIAN dIARY

Termination Charge….

Filed under: RaNTs@eARTH, unEarthly tERms — cafm @ 10:25 am July 18, 2007

Why do I have to pay more to call from one network to another?

Most of the tariff’s we see in for mobiles/fixed lines are with different costs to call “with-in” the network, outside network mobiles and then fixed land line.

This is because of a charge called the termination charge. Since we follow the “Calling Party Pays” principle, every time we connect from our operator A to a operator say H, A needs to pay H some part of the charge levied from us for the call, as rights to use a part of H’s network to access phone in H’s network. This is a strictly regulated charge since if it were a free market, very un-ethical strategies can be employed. Even now, the part of the cost that is passed on to the customer has only an upper limit and interesting strategies can be employed :)

This charge exists in VOIP also, as the termination charge paid to the non-VOIP network that forms that last part of the chain though which the data is routed and this is why VOIP is not as cheap as it seems to be.

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