UK termination rates to be slashed by 2014

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The UK Competition Commission has brought forward the deadline for when mobile operators will be forced to slash mobile termination rates (MTRs) for connecting calls from other networks or fixed lines.

UK regulator Ofcom said in March 2011 that MTRs should be cut from just over 4p per minute in 2010 to less than 0.65p per minute by 2015. Operators Everything Everywhere and Vodafone lodged an appeal with the Competition Appeals Tribunal (CAT) against this decision  with support from Telefonica O2.

However, the appeal has backfired and the CAT has said that it believes Ofcom had not gone far enough, and ruled that the charges should be brought down by 2014, rather than 2015.

Vodafone has criticised the decision to increase the speed at which mobile termination rates must fall, saying it will harm consumers.

“We are very disappointed that the Competition Commission considers that deep cuts in MTRs are necessary because it will further harm consumers,” the operator said in a statement. “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. 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. There has already been evidence from some High Street electronics retailers that this is happening.

“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. The CC’s findings are lengthy and complex and we will need to review the situation fully before deciding on our next steps.”

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