Yesterday I saw an advert in the London Underground that I think said something interesting about the differences between different countries, namely the cost per minute of ringing them up.
The advert was for something called Alpha Telecom which is apparently some sort of internet something-or-other for ringing people up in foreign parts.
I can’t explain how that works, but I can give you the different prices for the different countries with which we Brits would appear to be in regular phone contact, because I jotted them down. The numbers don’t say which countries are the best. But perhaps they do say something about which countries work the best. It would seem that distance has nothing to do with anything here, which I guess because this is the Internet we’re talking about. The INternet murders distance. What seems to matter is degree of serenity or confusion at the destination of your call.
All measurements of differential national merit strike me as interesting. What does it cost to become a citizen legally? What does it cost to become a citizen illegally? (Do some countries pay you to join?) Who gets the most sporting medals? What are the different credit ratings of different national governments? What proportion of people are wearing shoes? Driving cars? Connected to the Internet? Can read and write? Who scores highest and lowest, in the opinion of some bunch of people in Washington DC who measure “freedom” in different countries, and which countries have changed their scores the most since last year or in recent years? When does each country’s “tax freedom day” arrive, ditto? And so on. Well, maybe this cost of phone calls thing is another such score, albeit a very crude one.
So here are the scores, in pence per minute I assume: Austria 4, Somewhere illegible (Canada I think) 4, France 4, Germany 4, Hong Kong 7, Ireland 4, New Zealand 4, Pakistan 20, Spain 4, Sweden 2, USA 3, Australia 4, India 20, South Africa 8, and: Internet 1.
So, if I’m right about what this all means, the most efficient country in the world is the Internet, followed by Sweden, followed by the USA, followed by all the brand-X Western democracies. I think that Sweden and Hong Kong are the most interesting scores, the former for being so low, the latter for being rather high. Ireland and Spain have reputations for incompetence that they would seem to be shedding fast. I also wonder if Hong Kong, and maybe also South Africa, have gone or are going up, and whether either India or Pakistan are coming down from their current twin peaks.
But maybe I’m quite wrong, and it means either nothing at all, or something very trivial. I’m sure our many techy readers will elucidate. If you do, gentlemen, could you include an explanation of what this system actually is and does, because I can’t make it out at all. Surely a telephone is a telephone, and the Internet is basically something you look at and type into and get email in and out of with a computer, with occasional videos and tunes as decoration. How can you phone the internet?
I vaguely remember being rather surprised to see calls to Nigeria advertised at 30-something pence per minute, whereas the same company could connect you to the Ukraine for about one pound fifty per minute. As Brian said: is the Ukraine so much worse, or Nigeria so much less bad, than their respective reputations?
I suspect it’s got more to do with bulk-purchase rates for intercontinental bandwidth, and there being a lot more people in the UK who want to call Nigeria. Even more helpfully, they all tend to live near each other, and are thus readily marketed to by poster advertising.
I don’t know about his one spceifically, but I’ve dealt with what I think are similar companies.
Voice, like anything else, can be encoded in TCP/IP packets and routed over the Internet. If you phone soembody in Inida via this service, you’re actually calling their servers in England and they have servers in India that make a local call to the party you want; everything between then English and Indian servers in India is handled by converting the phone traffic into data packets and routing it over the Internet, instead of normal (more expensive) long-distance routing.
Although this avoids paying for international long distance phone lines, you still have to pay for the cost of the local call from their Indian server to the party you dialed in India. This represents most of the variation in the rates to different countries, btw.
But there’s a way to bypass the local teleco. If the person you’re calling has the right software, their servers can, instead of handing off the call to the local Indian teleco, route the data directly to the reciever’s computer and have the computer handle it through the sound card, speakers, and computer microphone. This is “calling the Internet”, since it uses the Internet for the local routing on the other end rather than the local teleco. It only works if the person you’re calling has a computer and an internet connection, and you know how to contact their computer instead of calling their phone.
So, when you “call the Internet”, they encode your voice into digital packets and send them to the internet-connected computer of the person you’re calling, instead of their phone. If you call anywhere else, they do the decoding with their own computers, and send the call over the normal telephone network in the recipient country.
Why is it cheaper for me to call my brother on his mobile in London from Hong Kong than to call him when I am in London?
I won’t bother answering the “internet” question, as the warmonging lunatic has answered that pretty thorougly.
Firstly, here is a map of the world, which has been rescaled so that the distance of a place on the map is proportional to the cost of calling the country from the UK. This is for 1998, and the effect has become even more dramatic since then.
Secondly, I blogged on this very question in August. The cost of calls has virtually nothing to do with international bandwidth (which today is vitually free) and everything to do with the charges made by the telephone companies in the country you are calling for terminating international calls.
The (simplified) answer to the main question is this. Back in the bad old days, international phone calls were governed by what was called the “settlements” system, in which countries had bilateral treaties, and agreed to charge the same amount for calls in each direction. If there were more calls made from country A to B than from B to A, then a “settlement” was made of the number of minutes of imbalance times a “settlement rate” per minute, as defined in the treaty. Settlements rates varied from country to country, and the more backward the country generally the higher the rate, but they were always far more than the cost of domestic calls.
Since then, we have had deregulation of telephone calls in some countries. If A deregulated but not B, the margins of phone companies in country A were eroded and calls got cheaper, but the settlement rate still provided a floor under the cost of calls to B. This sort of thing is the case when you are calling Nigeria or the Ukraine from the UK.
If you have deregulation of telephone companies in both A and B, then telephone companies in country B unable to charge any more for terminating international calls than they are for terminating domestic calls. In this case, you get international calls that are comparable in cost to domestic calls, as is the case when you call Australia, the US, or most of Europe. How low the cost of calls actually is still depends on what those domestic terminating charges actually are, which in turn depends on how efficient and competitive is the domestic market in that country. This is why calls to other EU countries vary in cost, even though deregulation has occurred in all those countries.
A final observation is that a few years ago, the US unilaterally lowered the settlement rates its carriers paid to telephone carriers in many of the worst foreign countries, and simply told them to accept the lower rates or they wouldn’t be able to receive phone calls for the US any more. This is why international calls from the US are cheaper than from many other places. Other countries have done this too, but not always as successfully, as no other country has as much leverage as the US. (This has ended up quite long. I think I will blog it as well as post it here).
As an answer to Paul on the cost of calls to mobiles, it used to always be the case that it cost the same to call a mobile in country B as it did to call a fixed phone in country B. In the days of settlements, this was fine and everyone was making money, as the settlement charge was easily greater than the terminating charge that the mobile operator in country B charged for domestic calls. However, with the end of the settlements system, and the rapid fall in the cost of international calls to deregulated destinations, the cost of a “standard” international call is now often less than the termination charges charged by a mobile operator in country B. If not rectified, this means that telephone companies are losing money on international calls to mobiles, and also the situation described: it can be cheaper to (say) call a mobile in London from Hong Kong than to call that same mobile from London.
Over the last year or so, this situation has changed, and international calls to mobiles in other countries now usually cost more than international calls to fixed phones in the same country. There are still a few anomalies, and London -Hong Kong may be one of them, but this bugs in the system are now largely ironed out.
I WOULD LIKE TO KNOW THE CHEAPEST WAY TO CALL FROM UKRAIN…THANKYOU
i will like to know how much it will take to travel from Nigeria to london