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1p-a-minute mobile calls in shake-up of charges by Ofcom
Mark Prigg, Science and Technology Editor20 May 2009
Mobile phone bills could be slashed under new rules being considered by the telecoms regulator, Ofcom.
It is considering abandoning the charges which operators make to connect calls to phones on different networks. These Mobile Termination Rates, or MTRs, account for up to 80 per cent of the cost of a call to a mobile, and are thought to bring in £2.5 billion a year for mobile phone operators.
Experts say that if the charges are abolished, the total cost of a mobile call could be cut to 1p or less a minute.
A spokeswoman for Ofcom today confirmed that it was considering “radical alternatives” to the current agreement, which expires in 2011. She said the move would give operators greater flexibility to design competitive call packages. MTRs are at least 4.7p a minute for mobile-to-mobile calls — compared with 0.3p for mobile calls to a BT landline.
BT and mobile provider 3 today launched a campaign to persuade Ofcom to remove the charges. Kevin Russell, CEO of 3 UK, said: “Our calculations show that the cost of terminating a call on a mobile network is less than a penny.
“The current regime allows all mobile operators to charge much more, at a cost of millions of pounds to UK consumers. “If we terminate the unfair rate, everyone will save money.
As charges come down, competition between operators will bring down prices. When this happens we will be able to provide flat-rate, unlimited calling offers which include numbers on any UK network. This will give consumers real freedom.”
The Federation of Small Businesses is backing the campaign. A spokesman said: “If termination rates came down to their real cost then the UK's 4.7 million small businesses would all save on their phone bills making them more competitive.
“Consumers will have more money in their pockets because their phone bills will be lower, and this extra disposable income will invariably be made available to the hard-pressed high street.”
Ofcom's consultation sets out six options for the future of the charges. These range from maintaining the current system, which has seen rates fall year on year, to one where the customer's own network is responsible for all the costs of making and receiving calls.
Most of the options are likely to reduce rates but Ofcom says the effect of removing termination regulation from mobile operators is uncertain.
Reader views (7)
Based on past Ofcom results I will not hold my breath on this happening
- Mike, London England, 20/05/2009 16:07
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Totally agree Nobby. The other area where they have failed is numbering. It is totally impossible to tell how much an 08 or 09 call will cost you. They should have grabbed the bull by the horns and implemented a scheme where cost bears some relation to the number. And as for London numbering (together with Oftel before them) words fail me. But then like all the other regulators it seems to be jobs for the boys/girls and nothing to do with employing people who understand the issues!
- Man U Fan, London, 20/05/2009 13:54
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A few years ago my Vodafone Pay-As-You-Go calls in the UK were .2p per minute. Then it jumped to 10p per minute. Last year it went to 15p per minute and then to 20p per minute in a few months.
Now Vodafone is moaning because they ONLY made £4.5BILLION profit in 2008-9.
IT IS ABOUT TIME THESE GREEDY RIP-OFF MERCHANTS WERE EXPOSED - JUST LIKE RIP-OFF MP's.
- Reuben Camara, Morecambe/Lancaster, 20/05/2009 13:41
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All is not what it seems. I can understand the Federation of Small Businesses backing the changes, but why would BT and 3 campaign to reduce these charges on their Networks. It's like biting the hand that feeds you?
- Haskey, London SE1, 20/05/2009 13:39
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We are funding the netire upgrade of the fench Spanish and German telephone net works in the cash cows that they have in 02 Tmobile and Orange.
They make excess profit through these outdated monopolies they have. They are no longer ploughing billions into this market and so the excess charges they had to make to cover that investment is no longer there.
Regulators should take note and act
- Duncan, Kent, 20/05/2009 13:39
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In return, they will claw back the costs by charging for receiving calls - this is the case in Hong Kong.
- Charles Siu, London UK, 20/05/2009 13:14
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How many times have Ofcom said they are going to do something about costly mobile calls? Pretty much every year since about 2001.
That's eight years of talking and not acting. Ofcom is yet another quango that the next government would do well to overhaul.
- Nobby Clark, Perth, Scotland, 20/05/2009 11:42
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