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Mobile Phone Charges Set For Big Drop

David Gilbert by

Mobile Phone Charges Set For Big Drop

Ofcom has announced that starting from next month, it will place a cap on the rates charged by all four national network operators.

This price cap will mean an immediate reduction from next month in the termination charges from the current rate of over 4p a minute to 2.66p a minute. Termination rates are the charges mobile phone companies bill their rivals for handling calls from their networks and as far back as 2009 BT and Three have been looking to change things. However the reductions will continue until April 2014 when charges will be reduced to 0.69p per minute, which will be equivalent to an 80 percent reduction. Currently O2, Vodafone and Everything Everywhere (T-Mobile and Orange) charge customers 4.18p a minute while Three UK charges 4.48p a minute.

Ofcom also expects that the reduced charges will promote competition in the mobile sector as operators will have more pricing flexibility and will be able to increase the range of packages available to consumers. It will not be only mobile customers who will benefit however as Ofcom expects these savings to be passed on to consumers in the competitive UK landline market as lower termination rates will also reduce the cost to landline companies. Some operators have already promised to lower their charges.

The regulator said that while mobile phone companies will lose money from the reduction in charges, they are gaining from a growing trend towards customers using data services, such as text messaging and accessing the internet from their mobile phones. So while they may be losing money on calls, for mobile operators traditional calls are becoming less and less important in terms of revenue and this is likely to continue in the coming years - so don't feel too sorry for them.

Source: Ofcom

Go to comments

Jmac

March 15, 2011, 5:10 pm

Um, Everything Everywhere is T-Mobile and Orange, not Three.

Enigma

March 15, 2011, 5:31 pm

Charges should today be on par with Land-line costs given the ubiquitous use of mobiles.

The whole charging and phone SIM system needs looking at.

One way to get the charges down is to get rid of these "Contracts" system and have ALL mobile phones sold SIM FREE. Bit like the change at will Utilities companies.

ALL charging plans and Ts & Cs must be FIRST approved by Ofcom Lawyers.

Martin Daler

March 15, 2011, 5:57 pm

I'm amazed the system of contract phones is allowed to exist. It's just a Hire Purchase arrangement, but without the consumer protection laws which apply to Hire Purchase. People are paying upwards of £600 spread over 24 months for a phone that retails about £400, with a bit of air time chucked in. If the operators were obliged to sell the phone and the service independently, with the APR visible for the phone, things might change.

ILoveGagdets

March 15, 2011, 6:40 pm

@Martin Daler - To be honest, there's nothing stoping anyone buying their phone sim-free and getting a sim-only contract. The only issue I see with the whole contract system is the locking of phones to a provider, but these days that's not too much of a problem to circumvent.

Kaurisol

March 15, 2011, 7:16 pm

Don't expect to see a significant drop in the cost of the calls - as the phone companies will then be losing that extra revenue from the termination charges. Also, I can't remember the breakdown, but there is a difference between the number of calls mobile to landline and vice-versa.

Swings and roundabouts, swings and roundabouts.

Enigma

March 15, 2011, 10:45 pm

@Martin Daler: Yup, and ALL thanks to the useless quango Ofcom.

@ILoveGagdets: True but the costs are higher.

Given, the middlepersons (being pc)involved, who ALL obviously take their cut, demonstrates another area where there is room for cutting costs to the Consumer.

Ultimately the OFT and Competition Commission are clearly failing the Consumer: take the ancient practice of Car Dealerships and their Guarantees and Servicing practices!!! Time to write to the EU Commissioner for Competition and Consumers respectively.

Only a few days ago there was News report on the Tescos 1000 item price cut: Tesco had allegedly increased some of the prices shortly before cutting them.

Here's an example of my experience: when Tesco reduced the price of its "Thin and Crispy oven fries" to £1.00 it was ticketed as reduced to £1.00/1.81Kg bag down from £1.25/1.81Kg bag in November 2010. However, when I returned I discovered that was not the case but in fact the bag was 1.5Kg!!! I pointed this out to the in-store staff and they replaced the ticket as "Was £1.25 and now £1.00, 1.5Kg" - clearly not correct! When the Offer was over they 'restored' the price to £1.25p BUT the bag weight was the NEW lower 1.5Kg!!!!!! In fact last week the Customer would have been better off buying 5Kg of potatoes for £1.85. :-))

V.E

March 15, 2011, 11:34 pm

Hmm interesting article but nothing to do with subsidy of handsets. We could have taken the Scandinavian route of high capital expenditure (handsets) and low operating expenditure (call rates). Instead we in the UK went with low capex and high opex and that drove the growth of mobile in the UK. That is why few consumers understand the actual costs of calls and devices.

Plus ce change!

Enigma

March 16, 2011, 3:03 am

Hmmmmm

Funny how prices of DVD players, BD, super-high tech TVs, game console, laptops, etc broad band have plummeted while specs, technology and quality rocketed.

What a load of crapex and bollex we get when we ask the same for Mobile phones/call costs, better Customer Service and say no to 'UPTO' BB crapex etc etc.

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