Mobile operators set to receive rate cuts

The Competition Commission has decided the UK's mobile termination rates — the amount one operator pays another to connect a call over their network — should be cut.

The announcement comes following a successful appeal by BT against mobile termination rates set by Ofcom in March 2007 — a move the communications regulator said at the time would lower the mobile costs for average punters.

In its decision, the Competition Commission has proposed termination rates for connecting to all of the UK's five networks — O2, Orange, T-Mobile, Vodafone and 3 — should be lowered in the next two to three years.

The commission has decreed by 2010/2011, termination rates for O2, Orange, T-Mobile and Vodafone should drop to 4p per minute, compared to Ofcom's proposed 5.1p.

For 3, the rate should be 4.4p according to the regulator, compared to the 5.9p favoured by Ofcom.

However, there have been calls for rates to drop even further. Kevin Russell, chief executive of 3, said the commission should drop rates to around 0.4p — the rate charged by fixed operators.

"High mobile termination rates are wrong. They are a barrier to effective competition, provide an artificial price floor for mobile calls and lead to an unnecessary subsidy from fixed-line customers to the mobile industry," he said in a statement.

The commission's decision has been passed on to the Competition Appeals Tribunal (CAT), which will consider the proposals. The CAT will examine the subject at its next case-management conference on mobile termination rates on 2 February.