Competition Commission brings forward mobile cost cuts

By Gareth Morgan
15 Feb 2012 View Comments
Person operating a mobile phone and laptop

The UK's mobile operators will have to cut mobile costs more rapidly than expected after the Competition Appeals Tribunal (CAT) imposed a three-year deadline for the firms to cut mobile termination rates.

The decision may not benefit businesses, however, as it could result in mobile firms charging more for data.

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Originally, telecoms watchdog Ofcom had ruled that mobile operators should reduce the amount they pay for carrying calls from customers on rival networks – the so-called mobile termination rate – from just over 4p per minute to less than 0.7p per minute by 2015.

Vodafone and Everything Everywhere appealed that ruling with the CAT, but instead of supporting the appeal it ruled that the cuts should be imposed over a shorter timeframe.

"We are disappointed the Competition Commission has disregarded the points we made regarding the effect of the proposed mobile termination rates,” said Everything Everywhere in a statement.

It suggested the cut would most likely impact consumers on pay-as-you-go contracts, where the level of subsidies on handsets and charges would become “unsustainable”.

But if mobile operators do look to recoup the income from mobile termination rates, they could also drive up the charges applied to mobile data.

Both BT and Three had backed Ofcom's decision, with Three writing to the CAT to highlight flaws in the appeal. Three stands to benefit most from the cuts, as it has fewer customers than its rivals.

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