Consuming Issues: Talk is cheaper, but why the wait?
Saturday 03 April 2010
Calling on your mobile phone is set to become a lot cheaper after Ofcom demanded this week that operators must reduce the amount they charge for connecting cross-network calls. It is estimated that these "termination rates" cost about £2.5bn in fees every year, most of which is passed on to customers in their bills.
The telecoms regulator has told mobile phone firms that they must cut the rates from their current high level of 4.3p a minute to just 0.5p a minute. The figures came as a huge shock to the industry as expectations had been that the rates would be cut to nearer 2p. The move will save Britain's 30 million mobile phone users some £800m, according to Ofcom.
That's great news, yes? Not quite. Ofcom has proposed to give phone operators four years to fall into line. Why the delay? The answer seems lost in the complicated regulatory world that mobile phone firms operate in. Not least is the fact that the current rate was set by Ofcom in 2007 and is due to last until 2011, which presumably means it would be unfair to impose the fee restrictions before that date. As a result the regulator has proposed to allow the phone firms to cut termination rates in stages, falling to 2.5p a minute by 2012, 1.5p by 2013, 0.9p by 2014 and, finally, 0.5p by 2015.
But Ofcom has given plenty of notice of this week's move. Just last year, it said it was considering "radical alternatives" to the current arrangement. In fact, it was responding to a European Commission recommendation that member states should aim to set mobile termination rates in a way that only takes into account costs that are incurred directly from terminating calls. The commission indicated that it expects rates to be between around 1.5 and 3 euro cents by 2012 across all member states. Ofcom launched a consultation in May 2009, which lasts until 23 June, and this week's proposals have taken account of the European Commission's recommendation. In other words, mobile phone firms have been given plenty of signals about the changes to termination rates and therefore had plenty of time to prepare.
Steve Weller, a communications expert at uSwitch.com, says: "This ruling is not before time but it's a shame that Ofcom has to force the issue. It would have been nice to see mobile companies taking this initiative through their own devices, but with millons of pounds at stake it is hardly surprising that some of the networks have been reluctant to co-operate."
BT has welcomed the proposals as it should mean calls to mobiles from landlines will come down. 3UK – as the smallest of the bigger operators – is also in favour of cutting rates. Kevin Russell, 3UK's chief executive, says: "Low mobile termination rates are great news. Consumers will benefit from better deals and we'll cut our prices significantly over the next two years."
But the three largest mobile networks – 02, Vodafone and the merged Orange/T-Mobile – are not so happy as they will be hit hardest by the rate cut in terms of lost revenue. It's also quite possible that they'll contest the new rates. That's the wrong approach, says uSwitch's Weller. "The key area of focus now should be making sure that the cuts are passed back to consumers. BT has already pledged to do this and it's our hope that other companies will follow suit."
The rate cut is, however, good news for competition. It should encourage smaller networks to come into the market and give the heavyweights a run for their money.
In another move this week, Ofcom said consumers will soon be able to transfer their existing mobile phone number to a new provider in just one working day rather than the current two days. If only lower rates could be brought in that quickly.
Heroes and Villians
Heroes: Consumer Focus
The Independent revealed this week that respected financial institutions such as Alliance & Leicester, Barclays, Halifax, Santander and Virgin have Isas paying a dismal 0.1 per cent. All had much higher rates when they were launched but dropped the rate some time later. So I welcome this week's super-complaint to the OFT about cash Isas. Consumer Focus points out that savers are losing between £1.5bn to £3bn a year because they are languishing in poor-paying interest rates. As Mike O'Connor of Consumer Focus, says: "Providers are using inertia and confusion to drop Isa rates faster than on other accounts." Not for much longer!
Staff at home delivery supermarkets can make unfortunate substitutions when the actual item ordered is unavailable. This week it was Tesco.com's turn. My father decided to send his two grandsons Easter eggs and ordered two to be delivered to us from Tesco.com at a fiver each. The eggs were unavailable at my local store and were substituted, but with the cheaper eggs, costing just 95p. With the delivery charge almost £7, they actually ended up very expensive. The net result is anger – which could have been avoided with some simple common sense from one of Tesco's staff.
- 1 Apple has installed security backdoors on 600m iPhones and iPads, claims security researcher
- 2 UK pirates will get four warning letters a year
- 4 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 5 Israel-Gaza conflict: Deadly flechette shells 'used by Israeli military in Gaza Strip’
Malaysia Airlines flight MH17 crash: 'Nine Britons, 23 Americans and 80 children' feared dead after Boeing passenger jet is 'shot down' near Ukraine-Russia border
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...
£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...
£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...
£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...
Day In a Page
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar