In telephony, the termination rate is one of the three components in the cost of providing telephone service, and the one subject to the most variation.
On every long-distance call in the United States, the customer pays for: Historically, each of these steps could be carried out via a separate company, and the toll paid by the originating (or in some cases the receiving) caller would be split among the three providers.
As of 2019, there are dramatic differences between countries in the charge demanded by the receiving company for completing (terminating) the call.
In the past, high termination charges in some countries were used as a payment mechanism for phone sex services.
There are often multiple providers for the originating and the termination portions of the call, since with cellular systems, in which the signal (the call) is transmitted between the customer and the central office via digital radio (before 2008, analog radio) rather than copper wire, the cost of setting up a new or competing service is far lower.
This termination rate therefore forms part of Operator A's cost of providing the call to its customer.
It is a long run model as it takes into account the growth of demand, which is calculated using data on observed traffic, income and user information.
Termination rates (TRs) derived from this model therefore calculate capacity costs of each element of the network, expressed in terms of per minute use.
The difference between both models is that while the former calculates TRs through the division of total costs by total demand, pure LRIC methodology calculates TRs by comparing a firm that provides mobile voice access and one that does not, to determine the necessary costs of providing mobile services.
As data transfer is paid on both ends for the same VOIP call, this special form of termination is expected to gain importance.
Such a model obviates the need for any regulation at a national level, other than a provision preventing mobile operators from restricting VOIP calls.
[9] The Nigerian Communications Commission, responsible for the largest African mobile market with 61 million subscribers, continually lowers the termination rates.
[12] Mobile termination rates in Mexico are currently regulated by the Ley Federal de Telecomunicaciones y Radiodifusión.
[14] Because of this, and article 131 of the Federal Law, Telcel, Telmex and Telnor cannot charge a termination rates to other agents.
[17] Mobile termination rate for domestic voice call is 18 Paisa per minute charged based on actual duration.
[22] All references to prices in this section are in € Euro cents (ct) for Eurozone countries, and in local currencies otherwise.
Termination rates in Montenegro were changed last time in February 2011, and are symmetric in mobile telecommunication networks.
[28] Fixed-line termination rates in Spain are currently from 0.56ct/min to 0.65ct/min depending on interconnect level, with a volume discount of maximum 20%.
[39] The rates do not apply to landline or mobile numbers allocated in the Channel Islands or Isle of Man.
Although fees from termination charges accounted for 14% of the revenue of mobile networks, it was argued that the cuts would allow them to become more competitive and offer cheaper packages to customers.
[44] The calling party pays (CPP) principle is the most commonly used termination charging approach among MNOs around the world, especially in the European markets.
[45] Within the CPP principle the caller has to pay mobile termination rates (MTRs) and there is no contribution from the called party.