4/7/2010 11:04:00 AM
O2 Europe CEO: Termination rate cuts could undermine Digital Britain
Ofcom's plans to cut termination rates will undermine the Government's Digital Britain plans, Telefonica O2 CEO Matthew Key has warned.
Key told The Times that operators are more likely to curb their investment in next generation networks as a result of Ofcom's proposals to cut termination rates to 0.5p, over the next five years.
He said in an interview: 'Ofcom is moving one of the key elements in the equation and we can't just sit by and let this happen. Clearly, we need to change our business model to do something to compensate.
'We have to have a balancing move and if that means cutting investment in rural areas, that may be what we have to do.'
Key suggested that operators might need to raise prices for prepay customers, substantially reduce handset subsidies or raise the cost of accessing the internet on smartphones to offset the impact of Ofcom's proposals.