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. 

10 thoughts on “The great British phone con”

  1. Posted 11/03/2010 at 12:37 | Permalink

    Internet access competes directly with per-minute telephone charges through services like Skype.

  2. Posted 11/03/2010 at 13:00 | Permalink

    Philip W. – pardon my ignorance, but is it possible to use Skype etc. conveniently with mobile phones?

  3. Posted 11/03/2010 at 16:04 | Permalink

    There is actually a significant difference between voice and data traffic. Decent voice traffic requires a much higher QoS (Quality of Service) as it is so much less tolerant, than data traffic, of network delay, lag, jitter, packet dropping etc. For example loosing half a second of voice conversation or delivering packets in the wrong order ruins a phone call and is immediately obvious. With data traffic it does not matter as lost packets can be resent and the receiver can transparently reorder the data. So it is more difficult and more expensive to provide quality voice connections compared to data connections.
    This partly explains why voice costs more.

    Skype is a good example. It uses standard data networks, so is cheap, but pays the penalty by being of much lower quality and reliability.

  4. Posted 18/03/2010 at 23:37 | Permalink

    @Ed Morgan,

    Since I can download a large (1280×1024 pixels) true-colour (32bit or 4billion+ colours) picture in e.g. under 5 seconds and this corresponds to 72 minutes of voice conversation (sampled at 9,600bps), does this not damage the idea of Quality of Service (QoS). After all, I am accessing 72 minutes of data in 5 seconds or less. Why is it I can download a 1hr film in a matter of a few minutes, but not get a decent phonecall.
    If QoS was an issue, BBC Iplayer just would not work. I do believe that many so called quality issues may be about the ISPs delaying VoIP data in order to create the perception of poor quality in order to protect their “voice data” market.

  5. Posted 18/03/2010 at 23:40 | Permalink

    @Phil Walker,
    We should not be paying that much for “voice calls”. With Skype I can have a conversation, watch video, instant message and send files all simultaneously. This is not possible on a standard telephone call.
    The debate around net neutrality is important because without such a debate, internet service providers (ISPs) can block certain traffic or slow it down. In the United States there have been significant instances of some ISPspreventing users accessing data sent on Port 25 (SMTP Protocol’s default channel) or even using “traffic analysis software” to monitor the type of data being sent so it can be blocked if it interferes with another offering (mail, voice calls etc).

  6. Posted 18/03/2010 at 23:45 | Permalink


    Actually, you can get Skype for mobiles as well as Cisco IP Communicator for mobiles. It just isn’t particularly easy to set up and configure, but it is possible.

  7. Posted 20/03/2010 at 12:56 | Permalink

    Only low-volume users should be paying per-minute rates. I just checked the BT website: they charge 5 pounds a month for unlimited UK calling, and another 5 pounds for unlimited calls to most advanced countries. That seems very comparable to the cost of internet access.

    Calls to and from mobiles are more expensive, of course, but that is also true of internet services, and the same pattern of moderately-priced all-you-can-eat packages applies.

  8. Posted 22/03/2010 at 15:02 | Permalink


    Is this £5 a month package introductory or all the time?

    BT rolls out new, ‘competitive’ consumer deals
    That’s competitive as in really expensive
    By Lewis Page

    UK infrastructure owner BT has today announced its new consumer bundle offerings following relaxation of Ofcom competition rules. The headlining £7.99-a-month anytime calls plus broadband is reasonable – but lasts for only 3 months, followed by a 15-month lock-in at an unimpressive £15.99.

    “Offering a bundle of broadband and Anytime calls for this knockdown price will launch us into the bundles market as an unrestricted competitor for the first time,” says BT consumer honcho John Petter.

  9. Posted 22/03/2010 at 19:05 | Permalink

    Costs are allocated between different services – you cannot say one is incurring more cost than the other for using a network of many parts and large amounts of unused capacity for most hours and most days. In the regulated telephone environment, regulators have allocated more cost to the regulated bits of telephony, and consequently permitted those monopolistic/oligopolistic segments of the network to recover those costs – ergo high telephony costs. Data has been encouraged as a growth market, and been given a relatively free ride by comparison. Anyone can buy a virtual pipe from a carrier and market the hell out of it at low prices, and fill it to quality limiting levels.

  10. Posted 24/03/2010 at 13:53 | Permalink


    The ability to download large amount of data quickly is not the same as having a good QoS. QoS is a technical term that refers to the ability to guarantee a certain level of performance to a data stream. Voice conversations do not require particularly high bandwidths but absolutely require a link with minimal delay, data loss etc. For example if the data packets on a high bandwidth link take 200 milliseconds to travel from source to destination you could still download a large picture in seconds without any appreciable delay. However, if you had a VoIP call over the same link the return trip would be 400 ms. A delay of almost half a second in a phone call is very noticeable and disruptive. IPlayer is not so dependent on good QoS as it is a one way data stream that can use a small buffer to even out network irregularities.

    To provide a decent QoS you need to be able to mark data packets so that priority ones, e.g. for VoIP, are able to traverse the network faster and with less disruption that less important data packets. This requires clever software and a significant degree of network control. Clearly when data traverses the open internet it is difficult to provide this guarantee.

    I don’t work for a telecoms company but I have been involved in introducing VoIP into a very large company and getting reliable, “guaranteeable” VoIP is a challenge.

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