If they succeed sub £35pm unlimited call packages could become a reality.
Bundled minutes have become ever more generous as the years have ticked by because of 1. Competition and 2. the slowly building threat of VoIP – but there’s one barrier to truly affordable calling: MTRs.
‘Mobile Termination Rates’ are the bane of the telecoms industry. In short they are the charges paid by operators to connect calls to mobiles and currently account for 4.7p or more of every minute of a call to a mobile. This is more than 10x the termination rate charged to call a fixed-line phone. Consequently BT & 3 have come out to demand a rethink.
The duo have teamed up to start a campaign called ‘Terminate the Rate’ which is hoping to pressurise regulator Ofcom to reduce MTRs to their real world cost of “around a penny or less”. As it stands, the 4.7p MTRs earned operators more than £750m just to connect calls – equivalent to £2m per day. This rate is protected by Ofcom until 2011.
Why would 3 and BT want to end such a lucrative charge? Because they are the biggest victims of it. You see MTRs only exist when calls are made from one network to another so ”all” BT calls to mobiles are subject to this charge while mobile operators pay a fraction of this to connect to landlines. As for 3, since it is by far the smallest of the UK telcos, the majority of calls made by its customers are to other networks while there is far less incoming MTR revenue so it actually loses money through the current system.
Perhaps most interesting however is what a 1p or less MTR could do for customer call charges. 3 says it believes packages offering unlimited cross network minutes would be available for less than £35pm. “When this happens we will be able to provide flat rate, unlimited calling offers which include numbers on any UK network,” said 3 CEO Kevin Russell. “This will give consumers real freedom.”
MoneySuperMarket.com, the GMB, the NUS (National Union of Students – naturally), the Federation of Small Businesses and Carers UK have so far thrown their weight behind Terminate the Rate but don’t expect the likes of Vodafone, Orange, T-Mobile and O2 to be fans of the idea.
Cutting MTRs would be a major win for the consumer, so it gets a big thumbs up from us. There’s a petition which can be signed on the site.
Terminate the Rate