Ofcom orders mobile operators to cut call costs

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The Independent Online

The telecoms regulator yesterday ordered the mobile phone operators Vodafone, Orange, T-Mobile and mmO2 to slash the charges for calls to their networks by up to 34 per cent.

The telecoms regulator yesterday ordered the mobile phone operators Vodafone, Orange, T-Mobile and mmO2 to slash the charges for calls to their networks by up to 34 per cent.

Ofcom said the new prices, which come in force from September, would remain in place until March 2006, allowing consumers to save "hundreds of millions" of pounds. The move, which endorsed a ruling that was previously made by the Competition Commission but fiercely contested by the companies, concerns the price operators charge for connecting incoming calls to their networks - so-called termination charges.

Ofcom yesterday produced a 200-page document that ended a six-year investigation by the competition authorities. Ofcom said it had concluded that direct controls were needed for the industry. Stephen Carter, the chief executive of Ofcom, said: "The decision closes a lengthy process, where we have concluded that price controls are currently a necessary market mechanism."

Mobile companies will still be allowed to vary the charges by the time of day and the new regime will not apply to termination on new 3G networks.

Reaction to the announcement was muted in the City but consumer groups welcomed the news. Christian Maher, an analyst at Investec Securities, said: "This is broadly in line with the Competition Commission's previous judgement. It was already priced into people's [profit] figures."

T-Mobile said it was "quite satisfied" with the price reductions, though others said the review remained too harsh. A spokesman for Orange said it "does not agree with the conclusion of Ofcom's review."

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