Ofcom bares its oh so sharp gnashers

IN A move that will have surprised many in the mobile industry, UK telecoms watchdog, Ofcom, has actually slashed the prices which mobile network operators can charge each other for connecting calls.

These so-called 'termination charges' form roughly 50 per cent of what a typical customer would normally pay for making a call. They dropped to 5.1 pence per minute for all the operators except 3, which is allowed to charge 5.9 pence.

The price changes come into effect over the forthcoming weekend (April 1st) and are set to last until 2011. Ofcom says, however, that they will "take place in a number of stages."

It also said that "charge controls remain necessary to protect consumers from unduly high prices." It appears that the EU commissioner for telecoms, Viviane Reding, is fairly happy with the changes.

A spokesperson for Reding said that Ofcom had "taken a co-operative stance" over the issue. The INQ reported previously that she was afraid Ofcom wouldn't go far enough.

The reductions should shave something like £2 billion off mobile network operator's revenues over the next four years. However, O2 doesn't appear to happy that its rival, 3, has been singled out for special treatment.

An O2 spokesperson said, "We do not believe that operators face different costs - they should all be charging the same." Is this sour grapes since O2 lost the contract to provide 3's 2G coverage to Orange?

Those most upset are the fixed line operators who feel that those with land lines are being made to subsidise the mobile network operators. After all, BT is only able to charge up to 1 penny per minute for calls terminated to its network.

BT's COO, John Petter, has been quoted as saying, "The mobile call termination rate has been too high for too long and [this] will force UK landline customers to continue to subsidise the mobile industry."

Curiously, little has been said about Ofcom's announcement that its next target is number portability. It's giving industry players until June to put forward their views.

Ofcom says that there are "concerns that mobile network operators may not have the right incentives to offer number portability to consumers that wish to switch to another network." µ

See Also
Ofcom to defy EU over termination fees

L'INQ Ofcom