Ofcom has today announced operators must reduce mobile termination rates (MTRs) to 0.5p per minute by 2015.
Operators currently charge rival firms 4.4p per minute to terminate calls on their networks.
Operators will be encouraged to start to reduce MTRs from April 1, 2011, and must comply with the new Ofcom rule of 0.5p per minute by April 1, 2015.
The announcement marks a victory of sorts for both BT and 3, which have been running a ‘Terminate the Rate’ campaign since May last year, calling for rates to be reduced to below 1p. The campaign has been backed by more than 100,000 people so far. However, both parties wanted the legislation brought in sooner.
BT claims it spent more than £750 million on MTRs in 2008, whilst 3 has paid more than £250 million since the company was formed.
3 director of regulatory affairs Stephen Lerner claimed the reduction will enable it to reduce call prices for customers on both fixed line and mobile by around 25 per cent.
He also claimed 3 will now be able to be more “aggressive” in the market place and increase its market share.
Lerner said: “There will definately be a reduction in the price of voice. There is no reason to believe prices will not continue to fall and from a 3 perspective, we will be in a position to pass along the reductions.
“We are expecting retail prices to reduce by over 25 per cent as a result of this decision and we will be a much more aggressive player in the voice market as a result of increased market share.”
“We are going to see increased profitability because we will be able to go after market share more aggressivley in the voice market, similar to what we are doing in the mobile broadband market.
A consultation period for any objections is open until June 23.
In addition Ofcom has announced the time it takes for customers to port their mobile numbers from one operator to another will be reduced from two days to one day by the first half of 2011.
The reduction is expected to save customers up to £1.5 billion per year.
Comparisson site uSwitch claims 11 million mobile users in the UK have switched operators in the past 12 months, with combined savings of more than £895 million or £81 each per year from new providers.
Around 18 million mobile users in the UK have never switched operators, which uSwitch claims could cost them £1.5 billion a year in total.
Ofcom has also instructed customers must receive their port authorisation code (PAC code) within two hours of requesting it from their network provider, receiving it via SMS.
A consultation period for any rejections is open until May 13, 2010.