Calling Party Pays (CPP) is the arrangement in which the mobile subscriber does not pay for incoming calls. Instead, the calling party pays for those calls. CPP is offered in many places, but has not been regulated in the United States where Mobile Party Pays (MPP) is still predominant.
In fact, both mobile call recipient and calling party (mobile or fixed network) pay in the USA. Many years have passed since the original CPP initiative discussed in this blog post.
One of the biggest changes is the marginalization of bearer services (voice and raw data) and the continued downward price pressure due to their commodization. These are themes we have discussed much at Mind Commerce along with the related need for Value-added Service (VAS) applications.
Calling Party Pays Issues
There are several issues involving CPP that must be considered. We will briefly discuss three of the biggest issues here.
Calling Party Pays Advice of Charge
There must be some way to notify the calling party that they will have to pay for the call. In Europe and South America, mobile numbers are dedicated to a specific block. This allows the calling party to know when they have called a number for which there will be a different tariff. It is problematic in the US, however, because numbers are allocated to fixed and mobile operators from the same blocks of numbers.
Billing and Clearing in Calling Party Pays
There needs to be a mechanism for billing and clearing between network operators. In most CPP markets, interconnect billing is the rule in which the terminating network is paid a certain amount of monies from the originating network. In contrast, MPP markets utilize a bill and collect mechanism in which the mobile operator expects to be paid directly by the subscriber for minutes of use.
Metered vs. Non-metered Fixed Network Calling
In Europe, fixed network callers are accustomed to paying for calls on a metered basis. In the United States, almost all wireline customers have flat-rate service. This creates a natural cognitive barrier to implementing CPP as most US citizens are very unwilling to pay for calls to mobile phones.
Status of Calling Party Pays
While many countries have utilized CPP for some time, the United States has struggled with the CPP issue. In Europe, the percentage of incoming calls to mobile phones is roughly in the range of 45-50% whereas in the US it is about 25-30%. CPP would enable the ratio of incoming to outgoing calls to become more in balance.
In 1997, the FCC initiated actions to investigate the viability of implementing CPP in the US despite the issues of resistance to CPP on the part of fixed network operators who did not want to impose CPP on their customers. Even though CPP could be optional for a mobile customer (to subscriber to CPP as a service), there is still the issue of the need for notification and billing/clearing arrangements that would create the need for further network investment and customer familiarization.
Since the FCC initiative, many opponents to CPP sited that it is not necessary due to various issues. For example, many mobile operators have offered plans in which the first incoming minute is free. In addition, certain mobile operators initiated voluntary CPP plans. However, these plans are limited in service capabilities due to the lack of a comprehensive deployment across networks regarding the notification and billing/clearing issues. Consequently, certain incoming calls would need to be MPP (rather than CPP) such as incoming calls while roaming, calls from other mobile subscribers, and calls from payphones, hotels, and other points of initiation that would difficult to bill and clear.
In the final analysis, the FCC decided to not impose a ruling for CPP. For many opponents to CPP this decision is a victory, claiming that market forces should dictate what is needed. Still proponents of CPP raise the question that CPP would benefit the overall market.