The competition commission has recommended that mobile
termination rates – the fees paid by
networks to other networks when they receive calls – should
be cut by 20%.
The move follows 3 owner Hutchison 3G and BT’s appeals
against Ofcom’s March 2007 decision on wholesale mobile phone voice termination
Some industry experts estimate the reduction in
termination fees will cost the established operators a combined £250m over the
next two years.
The body put forward its proposals to the Competition
Appeals Tribunal on 16 January and is now waiting for a response.
The competition commission said: ‘The [commission] has
determined that the charges for connecting to the O2, Orange, T-Mobile and
Vodafone networks should be reduced to 4.0 pence per minute (ppm) by 2010/11.
Ofcom had decided that they should fall to 5.1ppm by 2010/11.’
3 chief executive, Kevin Russell, said although the
move was a ‘welcome step in the right direction’, it did not ‘go far enough’.
He added: ‘3 has argued for a more fundamental reform of the system that would
see pence per minute wholesale rates being abolished or reduced to the level
that fixed operators charge – 0.4ppm.’
The competition commission determined that the charge
for connecting to the H3G network should be reduced to 4.4ppm by 2010/11, 1.5ppm
less than the price control under Ofcom’s decision.
Ofcom said: ‘Ofcom acknowledges the Competition
Commissions recommendation to the Competition Appeals Tribunal which is a
considered and detailed response about a set of very complex issues.’
Shares in Vodafone dropped 1.75p to 131.05p, after the
Competition Commission’s announcement today (22 January). A Vodafone spokesman
said the company had ‘factored in the raised prices going forward’.