8/14/2009 2:23:00 PM
Tesco and Asda go head to head on termination rates
Two of the UK’s biggest supermarkets have taken opposing positions on the reduction of termination rates.
Tesco has warned Ofcom that lowering charges would mean price hikes for customers, while Asda is supporting lowering the charge, saying it encourages a ‘level playing field’ between operators.
Tesco Mobile, which runs off the O2 network and is jointly owned by the O2 and Teco in a 50/50 split, has echoed O2’s position in which the operator claimed that lowering termination rates would mean increases for customers.
The predominantly prepay provider warned Ofcom that lowering termination rates would mean a price hike on call tariffs and that the effects of raising prices would have particular effect on prepay customers. Tesco said: ‘Ofcom should consider carefully the impacts on customer segment rather than this spurious impact on new entrants.’
Meanwhile, Asda claimed that a reduction would result in lower prices for customers and a more level playing field for operators.
Asda supported the lowering of termination rates despite having a wholesale agreement with Vodafone, a network which is also staunchly against lowering termination rates.
A number of companies made submissions to Ofcom from the end of July as part of a consultation taking place on termination rates.
Tesco Mobile said: ‘Tesco Mobile believes that reducing mobile call termination charges below long run incremental costs will have a significant impact on the structure of the UK mobile market and in particular on certain groups of customers. Changing where common costs may be recovered will have implications for pricing structures.’
Asda said: ‘Deregulation would present a level playing field for all Mobile Network Operator (MNO) and Mobile Virtual Network Operators (MVNOs). It would reduce both MNO and MVNO costs and create greater competition in the market place. Low cost providers will then be able to offer low price products to the customer.’