Consuming Issues: Talk is cheaper, but why the wait?

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!

Villains: Tesco.com

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.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
News
news
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor