UK mobile phone charges to be frozen
British mobile phone operators today looked set to get the go-ahead to maintain current charges for calls between different operators.
Regulator Ofcom said it was proposing to extend current “termination charges” – the amount charged by operators for connecting incoming calls from other networks and landlines – for another year.
Vodafone, O2, T-Mobile and Orange were told by Ofcom last year to cut these charges to around 6p a minute.
The lower fees were put in place until March 2006, but under today’s plans will apply until March 2007.
The move was met with relief in the City as many had feared phone operators would be forced to cut charges further. But it was likely to enrage consumer groups who argue they should be halved to around 3p a minute.
A spokesman for Ofcom said: “The charge that one operator charges another is a pretty niche area. Consumers aren’t directly impacted. Of course, if costs go up, they’ll pay more and if costs go down they’ll see savings.”
He denied that mobile phone operators were being let off the hook, saying: “We are not removing regulation. Things will be exactly as they are.”
He added that after March 2007, Ofcom was hoping the industry would come up with “non-regulatory ways of keeping call charges down”.
Ofcom said it had taken into account factors such as demand, equipment costs and the cost of capital in making its decision.
It said it would continue to allow Vodafone and O2 to charge 5.63p a minute, down from 8p before September last year, while T-Mobile and Orange would carry on charging 6.31p, down from 9.5p.
It is estimated that consumers pay as much as £200m (€298m) a year due to termination rates - adding up to £10 (€15) a month to a phone user's bill.
Despite the recent cuts, consumer groups still argue that the current charges are too high and the regime punishes those who make frequent calls to mobiles.
Shares in mobile phone companies rose today as investors welcomed Ofcom’s decision, with O2 among the highest risers.
