11/4/2009 9:59:00 AM
‘The industry is not known for transparency’
Last week, the Terminate the Rate campaign handed in 114,259 signatures on a petition to industry regulator Ofcom, detailing the support of people for lower costs for calling mobile phones by reducing mobile termination rates (MTRs) to around a penny or less. Prompted by letters from their constituents, 260 MPs have already added their weight to an Early Day Motion supporting a significant cut in MTRs.
MP for West Bromwich East Tom Watson raised the issue in Parliament last week (28 October) and Prime Minister Gordon Brown answered that consumers deserve a better deal. All this has happened in support of an issue that few outside the industry had even heard of six months ago.
The industry is not known for transparency. And at 3, we know there is still plenty of work to do in communicating things more clearly, but the removal of an artificial minimum price for calling mobile phones could make a huge difference. Perhaps that’s why the Campaign for Plain English is one of over 60 charities, membership organisations, businesses, councils and consumer groups that have joined the campaign.
Low MTRs are less popular, of course, with most mobile operators. They would mean a far lower subsidy from fixed-line customers – MTRs can make up to 80% of the price of a call from a home phone to a mobile – but perhaps what other operators are most keen to avoid is real competition.
It’s commonly said that the UK’s mobile market is ‘highly competitive’. Certainly there are lots of shops selling phones, hundreds of offers and, for now at least, a choice of five networks. But there is very little competition on the price of voice calls. And that’s not surprising: charge less than 5p and you’ll barely cover the cost of connecting to another network. It’s the reason that unlimited calling deals (and I mean real ones) don’t include mobile. It’s the reason fixed-line customers don’t call mobiles as freely as they’d like. Most of all, it’s the main reason consumers aren’t getting more for their money when calling mobiles.
The counter arguments are well rehearsed and so they should be, they’ve been wheeled out many times before – every time MTRs have come down. The argument goes: stop operators charging high MTRs and prices will go up, while usage will go down. Fortunately for consumers, the opposite has happened each time. Across Europe, MTRs are coming down and the European Commission has asked every regulator to give the ‘utmost consideration’ to a decisive move on reducing these charges. Ofcom is committed to looking at the issue. It’s a change that consumers understand better now and as a result, they are calling more loudly for change and are clearly expecting it to happen.