Vodafone Warns Of Risk To Overseas Services
News that the European Commission are looking to reduce termination rates between mobile phone operators by as much as 70% between now and 2012 has prompted Vodafone to suggest a doomsday scenario for the industry. Termination charges are the charges which one operator charges another to connect a call - thereby ensuring near worldwide connectivity - and seem to average around 8 euro cents a minute at the moment.
The European Commission are pushing through major changes to the structure with rates expected to fall to around 2.5 euro cents a minute by 2012. Vodafone is arguing that such a move will see mobile network operators struggle as they would need to introduce new charges or increase existing ones to make up for the short fall. The group has suggested that this could lead to as many as 40 million mobile phone users across Europe switching off for good and moving to alternative communication devices.
While it seems unlikely that the European Commission would look to push through changes if they were detrimental to the long term viability of the industry there is a need to introduce more competition and ensure the larger players do not monopolise the sector. Finding the balance between the two will be the difficult bit!
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