VanillaPlus Magazine Issue 1 2023: Are we nearly there yet?
Traditionally, network service providers have charged flat-rate termination fees regardless of the call’s originating country, the network service provider and the type of connection used – mobile or fixed. While a flat-rate billing approach may have its benefits – in terms of it being a simple, clear-cut fee for the network service provider – it is not helping their financial bottom line, and here’s why. Let’s use the example of a mobile customer in Australia who calls a friend in France. With the traditional flat-rate model, the French network service provider used a termination rate that didn’t reflect where the call came from, which network service providers were involved, or which type of line was utilised. All of these are factors that affect its cost of providing service. In addition, this flat-rate model no longer makes financial sense for many network service providers given trends such as the rise of over-the-top (OTT) providers and data usage outpacing voice. With this type of scenario, the flat-rate fee often doesn’t cover the actual cost involved in making the call termination happen.