4/1/2010 10:13:00 AM
Ofcom proposes termination rate slash
3 and BT’s Terminate the Rate campaign scored a massive coup today when Ofcom proposed cuts, which will effectively see rates cut down to zero in four years time.
Ofcom has proposed a reduction on termination rates from around 4.3p per minute to 0.5p per minute by March 2015.
The move will please 3 and BT, which currently lose revenues from the connection rates they have to pay to other providers. They have campaigned over the last year to cut the rates down to zero.
However, Vodafone, Orange, T-Mobile and O2 will be unhappy about Ofcom’s proposal, which for them will see a further cut in the revenues they make from the charges.
Ofcom said the cuts will see ‘consumers benefiting from cheaper calls and competition in both the UK fixed telecoms and mobile markets’.
It added that the proposals will mean that both landline and mobile operators have more flexibility in designing competitive call packages, promoting competition for the benefit of consumers.
Ofcom said: ‘The UK mobile market has changed significantly since Ofcom last set termination rates in 2007.
‘Today there are many smaller communications providers offering mobile services to consumers including mobile virtual network operators (MVNOs), voice over IP providers (VoIP) as well as the four mobile operators with national mobile networks (3UK, O2, Vodafone and the merged Orange/T-Mobile).
‘This means that there is more choice for consumers in the mobile market than ever before.
‘The way that consumers use mobile devices has also changed. Today’s consumers are as likely to send text messages or emails as make phone calls, and mobiles are increasingly used to connect to the internet.’
According to Ofcom figures, the volume of data traffic over mobile networks has increased by 200% over the last year.
For the four operators with national mobile networks, Ofcom has proposed a method for setting the rates from 2011 that only takes into account costs that are incurred directly from terminating calls, rather than additional so-called common costs.
For other mobile communications providers that are able to set their own termination rate, such as smaller or new entrant operators, the rates will be set on a ‘fair and reasonable’ basis.
Operators have until 23 June to respond to the consultation.