Ofcom has today announced mobile network providers are to have a new lower cap enforced on the rates they can charge landline operators to connect calls to mobile phones.
Set to kick into action on April 1st, the cap will only apply to the UK’s big four networks, O2, Vodafone, Three and Everything Everywhere, formerly Orange and T-Mobile independently, with smaller network providers such as Virgin Media and Tesco Mobile to be given their own rates “to be set on a fair a reasonable basis.”
With the major networks to be capped at 2.66 pence per minute from April 1st, Ofcom’s ruling will see prices continue to fall until they reach the target low of 0.69 pence per minute between 2014 and 2015. Whilst it is hoped that landline operators will pass these savings on to customers, it is expected that mobile networks will subsequently raise their consumer costs to recoup the cap losses.
Speaking out on the decision a Everything Everywhere spokesperson said: “We are disappointed with Ofcom’s decision and are currently reviewing the detail and our position as to whether we will appeal. Our concerns focus on the impact of the decision to our vulnerable pay-as-you-go customers.“ They added: “By applying pure LRIC methodology in setting call termination rates going forward, Ofcom has suggested we recover a larger share of our costs from retail charges. This may force us to change the pay-as-you-go model as we know it as a large number of these customers will now become uneconomical – making the way our consumers currently buy, use and enjoy their mobiles radically different going forward.”
A Terminate the Rate spokesman said: “Ofcom has acknowledged that lower mobile termination rates are better for consumers and committed to reducing them to less than a penny, which raises the question: why can’t those benefits be realised sooner? In the long term, this is a win for consumers: cutting mobile termination rates supports competition and better deals for all that call mobiles.”
BT, a key player in the recent ‘Terminate the Rate’ campaign, has become the first landline operator to declare it will extend savings to customers with Managing Director Consumer of BT Retail, John Petter, announcing: "Ofcom has made some worthwhile reductions in mobile termination rates, which will benefit customers in the near future.” He added: “Our focus is now on developing an all-inclusive package that will enable people to call mobiles from their landlines at no extra cost, with no fear of 'bill shock'. This will be incredibly good news for BT's customers."