Unfair Ofcom urged to cut 3 rates further

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Telecoms regulator Ofcom has been urged by network operators to make further cuts to 3s termination rates, following its £500 million crackdown on mobile call connection charges at the end of March.

From Sunday (April 1), networks have been subject to new charge controls, which limit the fee they can charge other telecoms companies for connecting calls on their mobile network. The reductions will be phased in during several stages between now and 2011.

3 has been hit hardest. It has been made to reduce call termination charges by 45 per cent, to 5.9p a minute. But its termination charges remain higher than those of rivals.

Wholesale charges for Vodafone, O2, Orange and T-Mobile are to be reduced to 5.1p a minute and will apply when connecting calls on both 2G and 3G networks. This spells a cut of about 20 per cent for Orange and T-Mobile, and a cut of 10 per cent for Vodafone and O2.

An O2 spokesman said: We dont believe that the cost of actually terminating a call differs between operators. Our belief is that operators have to be treated equally. 3 is no longer a new entrant in the market and technology is pretty similar these days.

Orange also said it was high time that 3 was brought into line with the rest of the networks: This is something we have been discussing with Ofcom for some time now. For too long, 3 has been able to operate within a different set of boundaries, said an Orange spokesperson.

3, which is reviewing the regulatory document and has not ruled out an appeal against the decision, said that it was unsurprising to hear sour grapes from the other networks. A spokesman for 3 said: 3 has done more than any other network to bring competition to the UK market. The other networks dont match our great value price plans.

Meanwhile, T Mobile said the industry could have made a better decision on its own and, like 3, said it would look at the Ofcom document in more detail.

This could have been resolved by the network operators themselves without the involvement of Ofcom, but obviously well abide by the decision, said a spokesman. The mobile market is highly competitive already. Ofcoms decision could potentially be revenue neutral for T-Mobile, but the document still needs to be looked through.

Ofcom said the new charge controls were necessary to protect consumers from excessive prices, and expects the move to result in significant savings for consumers over the four-year period that the controls will be introduced.

An Ofcom spokesman said the industry body had been reluctant to impose the charge restrictions. He said: We look forward to a time where effective competition in the market means it no longer needs to be regulated. There may be technological advances in the future or developments in the market that will make way for that, but we dont think that will be before 2011.

In general, the networks welcomed the move.

Vodafone chief executive Nick Read said: The regulatory environment is very stable at the moment. Ofcom has been very consistent on its policy application áa

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