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15 February, 2012

Landline to mobile fees to be reduced sooner, CC rules

Landline to mobile fees to be reduced sooner, CC rules
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The UK's Competition Commission has said that proposed cuts to the cost of landline calls to mobiles should happen more quickly.

Ofcom ruled last year that the fees charged by mobile operators for calls on its network should fall by 80% over the next four years.

Rates have dropped, but the process has been held up by legal action.

Vodafone warned that the cuts would mean higher costs for pay-as-you-go customers.

The fees mobile phone firms charge rivals for handling calls from their networks - also known as mobile termination rates (MTRs) - are regarded by some as excessively high.

Last year Ofcom reduced the charge from an average of 4.18p to 2.66p and wants to see it fall to just 0.69p by 2015. It said at the time that it hoped the reduced fees would be passed on to customers.

But the process has been held up by appeals lodged by Vodafone, Everything Everywhere and O2, who argue that the cuts are too aggressive.

BT, which alongside mobile firm 3 has led the Terminate the Rate campaign, wanted to see quicker and more drastic reductions.

The Competition Commission (CC) appeared to agree and has ruled that the reductions should be implemented by 2014.

"Our suggestion is that prices fall a bit faster but there is a strong likelihood that the mobile firms will launch another appeal so this is not done and dusted yet," a spokesman for the CC told the BBC.

If the cuts do go ahead, mobile companies will be out of pocket by as much as £800m a year.

Vodafone warned that the loss of revenue would have to be passed on to customers.

"We are very disappointed that the Competition Commission considers that deep cuts in MTRs are necessary because it will further harm consumers," the mobile operator said.

"We warned Ofcom at the time of its original decision that drastic cuts in termination rates would disenfranchise many consumers who rely on their phones to keep in touch with friends and family... making it unsustainable for the mobile phone companies to continue subsidising the high cost of mobile handsets for pay as you go users," it added.

It claims that the cost reductions are not being passed on to landline customers either.

"It is particularly galling to see the commission's position given that many of the fixed-line operators have merely pocketed previous reductions in mobile termination rates, instead of reducing prices for customers. BT, meanwhile, has actually increased its line rental prices three times over the past year and a half," it said.

Following Ofcom's ruling last April, BT cut landline charges from 7p per minute to 5.3p per minute in the evening and from 13p per minute to 11.3p during the day.

It welcomed the CC's decision.

"We are particularly pleased that the CC has upheld our view that Ofcom should have brought forward its low-rate target by a full year," the telecoms firm said in a statement.

"Despite vigorous attempts by the incumbent mobile operators to have Ofcom's approach overturned and so increase the rates they can charge for terminating calls, the CC has decided that wholesale mobile termination rates should be reduced even further," it added.

It said it hoped that the decision can brought into effect "as swiftly as possible".

Source: BBC

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