New cap to cut mobile call charges
By Press Association, 6 February 2015
The cost of calls between mobile phone operators is set to fall after the industry watchdog proposed a new cap on charges.
Ofcom said that mobile phone termination rates – where networks charge each other to connect a call to a mobile or landline – should fall by almost 42% from 0.817p a minute to 0.477p in April 2017.
The watchdog said it has ensured that mobile call charges have continued to fall as the economies of scale in the industry have increased over the last decade.
It said in 1995 mobile phone termination rates were as high as 25p.
The regulator said: “Following previous intervention by Ofcom, mobile termination rates have fallen significantly in recent years.”
The watchdog added it intends to publish its final statement on termination rates next month, once the European Commission has approved its plans.
The move comes as consolidation in the UK mobile phone industry is likely to see the number of major players fall from four to three.
BT Group has finalised plans to buy EE, Britain’s largest mobile phone network, for £12.5 billion, while Hutchison Whampoa is in talks to buy O2 from Spain’s Telefonica for around £10 billion. Hutchison already owns the 3 mobile network, and combining it with O2 would create the UK’s biggest mobile group. The other major mobile phone firm is Vodafone.
Which? executive director Richard Lloyd said: “This deal would signal more significant change to the UK telecoms market, with O2 and Three also expected to merge.”
“Fewer players in any essential market is rarely good for consumers.”
“The competition authorities must now look at both the proposed mergers and the market in the round to make sure that consumers are protected from unfair price increases or poorer service as a result of less competition.”
An Ofcom spokesman added: “Today’s proposals would result in a small cut to the wholesale fees that mobile operators charge each other.
“This cut is intended to improve competition between operators. It doesn’t mean lower prices for mobile users directly, but those prices have come down in recent years after previous action by Ofcom.”