Competition commission calls for 20% reduction in termination rates

Competition commission calls for 20% reduction in termination rates


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 charges.


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’.


Written by Mobile Today
Mobile Today


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