Crackdown on cost of calls to different mobile networks

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The Independent Online

Mobile phone charges are to fall after regulators announced a crackdown on the "rip-off" cost of calling another network.

Limits will be imposed on the £2bn a year made from surcharges, which can account for half the price of some calls to a mobile phone.

Networks impose the "call termination charge" when a call is made to a rival network. Ofcom, the communications watchdog, announced plans to cap the charge for existing 2G phones when current safeguards run out next year. The regulator will also extend the cap to the latest 3G generation of mobile phones that allow faster downloading of songs and videos.

The crackdown is the second significant boost for mobile phone users in a week following the European Commission's decision to slash the cost of calls made abroad in Europe by mid-2007. The move means people will pay no more on the Continent for their calls than they do at home, slashing bills by between 40 and 60 per cent.

The adoption of "home pricing" will save EU consumers almost £7bn a year but it has infuriated mobile phone operators, whose European Telecommunications Network Operators lobby group condemned the EC's " heavy intervention".

Under Ofcom's present rules, Vodafone and O2 may charge an average 5p per minute termination charge for calls on the existing 2G network, rising to 6p per minute for T-Mobile and Orange. Ofcom said yesterday it intends to extend its curbs on termination charges for the 2G network from March 2007, and to introduce the same cap on the new 3G handsets.

Three million people are customers of 3's 3G network while the technology is also used by a small proportion of the four other mobile operators. Ofcom will consult on pricing levels for termination charge limits later this year. A spokesman said: "We believe charge controls will continue to be the best way to keep down the cost of connecting calls to mobile networks.

"Our initial analysis leads us to the view that 3G network operators should be subject to these controls in the future as more and more people subscribe to their networks." 3 said its termination charges were commercially confidential.

A spokesman for the National Consumer Council said: "We fought hard for controls on the 2G network and it's great news for consumers that protection against rip-off charges has been extended."

Looking to the global market, Nokia ­ which sells a third of all mobile phone handsets ­ forecast unexpectedly high sales this year because of demand in the developing world. Its chief executive said half of mobile phones sold in 2006 would be bought in developing countries. This meant the industry total of 795m handsets sold last year would probably be beaten.

China, where three out of 10 people own mobiles, is the fastest-growing market, adding 5 million subscribers a month. Beijing is expected to issue 3G licences some time this summer, worth up to $12bn (£6.9bn).