Ofcom cuts mobile termination rates

Regulator announces plans that will force operators to slash rates from above 4 pence per minute to 0.69 pence per minute by 2015

Ofcom today outlined its plans to slash Mobile Termination Rates (MTRs), the charges that operators make to each other to connect calls to their respective networks.

Under the plans MTRs will be capped from April 1 and will eventually fall by 80 per cent by 2015 according to the watchdog.

Under the plans Everything Everywhere, O2 and Vodafone will all need to reduce their rates from 4.18 pence per minute to 0.69 pence per minute by March 31 2015.

This will see rates falling to 2.66 pence per minute in 2011/12, 1.70 pence per minute in 2012/13, 1.08 pence per minute in 2013/14 and eventually the required 0.69 pence per minute in 2014/2015.

Three which has been pushing for the rates due to the fact it is smaller than the rest of the operators will need to make the same reductions but from its current charge of 4.48 pence per minute.

Ofcom said the 28 other mobile communications provider such as smaller or new entrant operator would need to set their rates based on a “fair and reasonable” basis in order to create rates that are in line with the main operators charges.

The regulator said the decision to slash the costs of MTRs was based on research which found data, rather than voice calls now forms the majority of traffic over mobile networks.

It said due to the fact termination rates only apply to calls, by the end of the end of the control period in 2015, the operator revenue collected by MTRs is likely to be less significant.

A spokesperson from the advocacy group ‘Terminate the Rate’, headed up largely by Three and fixed line provider BT said Ofcom’s decision was the right one and should have been made earlier.

“In the long term, this is a win for consumers: cutting mobile termination rates supports competition and better deals for all that call mobiles,” the spokesperson said.

Mobile News will be bringing you the operators’ comment as it happens.

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