3 goes to court to stop Ofcom

IT SEEMS that Ofcom just can't win. UK network operator, 3, is taking the UK's telecoms watchdog to court for being too harsh by dropping the so-called 'termination rates' too low.

According to a report in the FT, the new boss of 3 UK, Kevin Russell, has lodged an appeal with the Competition Appeal Tribunal on the subject.

Although 3 doesn't specifically say so, the move is almost certainly triggered by fears of lost revenues now that the EU has introduced the new lost cost Eurotariff for roaming.

Back in March, Ofcom announced that it was slashing the prices which the network operators could charge each other for connecting calls to their networks.

At the time the move was welcomed by pressure groups as helping to lower mobile phone charges.

Ironically, Of com had singled out 3 for special treatment - allowing it to charge 5.9 pence per call as opposed to 5.1 pence per call.

The concession actually drew criticism from rival operator, O2. An O2 spokesperson said, "We do not believe that operators face different costs."

3's argument is that it very definitely does face different costs. That's because more people phone out of the 3 network than phone into it.

The explanation is intriguing. Russell is blaming a 'two phone' culture for the difference. He argues that as many as 30 per cent of 3's existing subscriber base have retained their old telephone number and handset when switching to 3.

Russell says the reason for this is the UK's clumsy number portability regime. It's perfectly possible to take your old number to a new network but the whole process takes about five days.

So - as a professional - unless you time your request to coincide with a week's holiday, you lose five days worth of calls. Instead of risking that, 3's customers carry on paying to keep their old handset going.

Kevin Russell claims that in his native Australia, the same process takes only two hours. So you could make the change over lunch.

3 is still losing money and hasn't broken even yet as expected. Ofcom's decision to cut the termination charges was prompted by pressure from the EU's Telecoms Commissioner, Viviane Reding.

It's an illustration of how meddling with prices can very definitely have an impact on some operator's profitability. It's hard to see if the UK's fifth operator, 3, goes bust as a result, Reding's interference will have helped competition as she claims. µ

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