Ofcom officially cuts mobile termination rates

Cheaper mobile calls will soon be here, as telecoms regulator Ofcom has made the final decision on mobile termination rates.


Just over a year ago, it had announced it would lower mobile termintation rates (MTRs) - the fee paid by network operators, from calling network to called network. Now it has confirmed that these rates will fall to 2.6p this year, 1.7p in 2012, 1.1p in 2013, to its final destination of 0.7p by April 2014.


Because networks now need to pay out a smaller fee for outgoing calls, they can charge consumers less to make calls. Theoretically at least.


The campaign to lower MTRs was spearheaded by Three - the UK's smallest network by customers - and BT, which sees more outgoing calls than any operator. It's not difficult to extrapolate that these are the two bodies paying the highest percentage of their outgoings in MTRs.


The UK's other operators have already expressed displeasure at the lowering of MTRs, claiming that if they receive less in MTRs, they will not, as Three and BT postulate, be able to lower call rates. T-Mobile and Orange have already released a statement as Everything Everywhere:


"We are disappointed with Ofcom's decision and are currently reviewing  the detail and our position as to whether we will appeal.  Our concerns focus on the impact of the decision to our vulnerable pay-as-you-go customers.  By applying pure LRIC methodology in setting call termination rates going forward, Ofcom has suggested we recover a larger share of our costs from retail charges.  This may force us to change the pay-as-you-go model as we know it as a large number of these customers will now become uneconomical - making the way our consumers currently buy, use and enjoy their mobiles radically different going forward."  


Three, on the other hand, says that lowered MTRs will allow it to offer all-you-can-eat tariffs with better value for consumers. And indeed its The One Plan tariff, which recently expanded to include truly unlimited data, seems to support this.


MTRs will drop from April this year, so we should start to see the benefits - or consequences - by year end.

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