Operators consider termination rate legal challenge

Operators consider termination rate legal challenge

Operators are understood to be considering a legal challenge after Ofcom launched plans to reduce termination rates by 80% over the next four years.

Vodafone, O2 and Everything Everywhere were unhappy with the proposals, saying costs would be passed on to lower-income prepay users, who receive more calls than they make.

Vodafone is understood to be consulting with its lawyers over the decision. Meanwhile, O2 is ‘considering its options’ as it goes through the 500 page document.

Everything Everywhere said it was ‘reviewing [its] position as to whether [it] will appeal.

Meanwhile, well-placed sources indicated that Three will counter-challenge the decision if the other operators try to launch their own legal challenge.

A source said: ‘It is likely in the event that the incumbents challenge the pricing, that Three will challenge at the other end.’

Vodafone UK CEO Guy Laurence said: ‘We are really disappointed that Ofcom has ignored the evidence that termination rate cuts will mean higher costs for prepay customers especially at a time when money is tight for many families. We are studying Ofcom's decision and considering all of our options.’

An O2 spokeswoman said: ‘O2 is deeply disappointed that Ofcom has chosen to peg O2’s mobile termination rate to the “pure LRIC” cost standard.  It results in charges that are too low.  Ofcom continues to regulate other companies, including BT, on other, more generous cost standards and this is discriminatory. 

‘Pre-pay mobile customers are likely to be worse off as they are charged to make up the shortfall and there is scant evidence that BT and other fixed companies will pass the lower costs to their customers.’

An Everything Everywhere spokesman said ‘We are disappointed with Ofcom’s decision and are currently reviewing  the detail and our position as to whether we will appeal.  Our concerns focus on the impact of the decision to our vulnerable pay-as-you-go customers.  By applying pure LRIC methodology in setting call termination rates going forward, Ofcom has suggested we recover a larger share of our costs from retail charges. 

‘This may force us to change the pay-as-you-go model as we know it as a large number of these customers will now become uneconomical – making the way our consumers currently buy, use and enjoy their mobiles radically different going forward.’



Written by Mobile Today
Mobile Today


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