Vodafone hits out at decision to accelerate MTR cut

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The Competition Commission says charge for connecting calls from other networks must fall faster and further than lain out in Ofcom ruling in March. But Vodafone says decision will hit consumers 

Vodafone has criticised the Competition Commission’s decision to increase the speed at which mobile termination rates must fall over the next three years, saying it will harm consumers.

The Competition Commission is forcing operators to slash mobile termination rates (MTRs) for connecting calls from other networks or fixed lines more quickly over the next three years and has set a lower final rate that must be met in four years time.

In March last year Ofcom told operators that MTRs should be cut in a stepped process that would see them fall by 80 per cent from 4p per minute to just 0.69p by 2015.

The new ruling says that the rate of the cuts to MTRs should be faster over the first three years, before falling modestly in 2015 to a lower rate than originally recommended by Ofcom of 0.65p per minute.

Large operators have complained that the MTR cuts will make prepay mobile deals unsustainable and Vodafone, Everything Everywhere and O2 appealed Ofcom’s decision in May.

However, both Three and BT have supported the cuts.

In a statement, Vodafone said that it was disappointed by the latest ruling and claimed that fixed-line operators such as BT and Virgin were merely pocketing the savings rather than passing them on to consumers.

A spokesperson said: “We are very disappointed that the Competition Commission considers that deep cuts in MTRs are necessary because it will further harm consumers.

“We warned Ofcom at the time of its original decision that drastic cuts in termination rates would disenfranchise many consumers who rely on their phones to keep in touch with friends and family and it is happening.

“Just last month, Carphone Warehouse said the pre-pay market was down 40% in the run-up to Christmas.

“This is because Ofcom’s decision is making it unsustainable for the mobile phone companies to continue subsidising the high cost of mobile handsets for pay as you go users, meaning that they are out of the reach of many people.

“It is particularly galling to see the Commission’s position given that many of the fixed-line operators have merely pocketed previous reductions in mobile termination rates, instead of reducing prices for customers. BT, meanwhile, has actually increased its line rental prices three times over the past year and a half.”

1 COMMENT

  1. The spokesperson states CPW PAYG sales were down in the run up to xmas by 40% because these are out of the reach of many consumers? Is £4.95 too heavy for a basic call and text handset? – As for fixed line operators pocketing the money – fixed to mobile has never been cheaper for the consumer. Poor argument Voda.

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