The great British phone con
With the advent of cheap, ubiquitous broadband, I am beginning to wonder why we pay so much more for voice calls than we do for Internet access.
By my calculation, the cost of a voice call is typically thousands of times higher than the cost of browsing the Internet, when measured in terms of the amount of data transferred. Yet there is no significant difference between voice and data on digital exchanges, and almost all exchanges in Britain are now digital.
A similar argument can be made about mobile phone charges. With the new technologies of GPRS / UMTS / 3G, we can put through at least 10 times the necessary bandwidth for voice data all the time over a mobile almost anywhere in Europe. However, a very large discrepancy between voice and internet charges remains.
Then there is the international dimension. If you were browsing the Internet, would you expect to pay more money to download a page from Brazil than you would one from Bognor Regis? Of course not. You pay a flat rate and you can surf anywhere in the world anytime. So why do firms persist in charging different rates for calling different countries when they are all actually equally easy to get to?
Why? Habit. We are stuck in our ways and we apply an erroneous rationale to information costs by equating it with sending something physically. Imagine if a radio charged its users more money the further they got away from each other!
So how have the phone companies got away with this for so long? I would argue that it can only be because of artificial restrictions on access to the networks. The government needs to open up all areas of our telephony network to real competition.