United Kingdom Mobile Interconnect Shenanigans

| About: BT Group (BT)

A few notes on mobile interconnect:

a) T-Mobile & Truphone are going to court on Monday about whether or not T-Mobile has to interconnect its normal voice customers to Truphone's shiny new UK mobile number range (delivered via VoIP rather than circuit-switched). I haven't waded through the respective legal documents in detail, but T-Mo's lawyer wins the comedy prize for his comment on page 15 about the 'monopoly' of the newspaper seller.

b) Ofcom has ruled in a case about different interconnect prices for terminating on 2G vs 3G networks, relating to BT Group (NYSE:BT) and the various other UK network operators. My reading of it is that BT has to pay retrospectively a 'reasonable' blended termination fee (higher than 2G) that incorporates the supposed higher costs of 3G voice termination. That was actually determined in Ofcom's document on interconnect earlier this year, but the dispute relates to an earlier period.

. . . I am, however, trying to work out whether BT Group is being really really clever on this . . . despite its protestations about 2G vs 3G termination costs, it's actually in BT's longterm interest to have termination fees to mobile numbers being cost-variant across different technologies. This then gives it scope to argue the right to pay less for any future calls to mobile numbers that terminate on a cheaper network infrastructure - say over WiFi, or via a femtocell, via fixed VoIP, or to a voicemail server.