Cheaper mobile calls on the cards
CHEAPER calls to mobile phones are finally on the cards from September after Britain's big four mobile phone operators lost their six-year battle with regulators.
New telecoms watchdog, the Office of Communications, today ruled that Vodafone, O2, Orange and T-Mobile must slash the prices they charge other network operators for calls to their 2G Networks by up to a third.
This mean far cheaper calls from BT lines to mobiles' 2G networks with the so-called 'termination charges' mobile operators charge landline operators passed on to consumers while mobile operators are expected to lose around £2bn a year in collective revenues.
Vodafone and O2 have been ordered to cut their average termination charges from around 8p a minute to 5.63p, a near 30% fall, while T-Mobile and Orange have been told to drop their rates 33% from 9.5p a minute to 6.31p.
Mobile operators have from September to March to put the reductions in place with average charging remaining at those rates until March 2006.
A BT spokesman said: 'The regulators have been reviewing this for some time. We welcome the cuts and hope that the operators make the handing over of the cuts a speedy process. It's all good news for our customers and consumers in general.'
The cuts are about 0.04p a minute better for consumers than reductions envisaged by the Competition Commission in its report on charging in January 2003.
There have been suggestions that the mobile phone operators will look to make up for the shortfall in connection revenues elsewhere such as increasing some of the costs for sending text messages - one of the fastest-growing new forms of income for mobile companies.
An Orange spokeswoman said: 'It is unfortunate that Ofcom thinks it necessary to intervene in the highly-competitive mobile market and we will continue to ensure that our customers get best value for money.'
A competition inquiry into the prices mobile operators charge for connecting to their networks began in 1998 with a referral to the then Monopolies and Mergers Commission.
In 2001 Oftel, Ofcom's predecessor, proposed price cuts of 12% below the retail price index. Mobile firms contested this and the matter was referred to the Competition Commission which reported its findings in January last year.
