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23
January 2003 - The four mobile operators will be required
to reduce their charges for making calls to their mobile
networks, David Edmonds, Director General of Telecommunications
has confirmed today.
The
Director General announced today that the Competition
Commission's findings supported Oftel's view that consumers
pay too much for calls to mobile phones and that the
mobile operators must cut their termination charges
for these calls.
Consumers
will make considerable savings on the basis of the Commission's
recommendations. Consumers would save £190m each year
to 2006 in calls from fixed to mobile phones as a result
of the 15 per cent cut in termination rates by July,
with further cuts proposed over the following two years.
Following
the Director General's reference to the Competition
Commission in January 2002, the Commission has reached
the following conclusions:
- operators
are overcharging customers by up to 40 per cent for
terminating calls onto their networks;
- callers
to mobile phones have no choice but to pay the termination
charge set by the mobile operator, which means that
there is little incentive for the operators to reduce
their charges towards their actual cost;
- there
should be a 15 per cent cut in call termination charges
for all mobile operators by 25 July 2003; and
- further
charge controls for termination rates should be introduced
after July - RPI minus 15 per cent for O2 and Vodafone,
and RPI minus 14 per cent for Orange and T-Mobile.
The charge controls should run for three years until
2005-06.
The
Director General has accepted the Commission's conclusions
and will now consult on the amendment to each operator's
licence in the light of these recommendations.
Announcing
the Commission's conclusions and recommendations, David
Edmonds said today:
"After
a thorough and independent investigation, the Competition
Commission has reached the same conclusions as Oftel
did in 2001. The Commission has agreed with Oftel that
the operators are acting against the public interest.
"Consumers
are being overcharged for calls to mobile phones and
the mobile operators must reduce their charges to a
fair level.
"In
competitive markets, consumer choice puts pressure on
companies to make prices reflect cost, or risk losing
their customers.
"Callers
to mobile phones have no choice but to pay the high
termination charges set by the mobile operators. There
is no real incentive for operators to reduce their charges,
which means that call termination charges have remained
much higher than cost.
"I
will begin the process of implementing the Commission's
recommendation of a one off cut of 15 per cent by July.
"The new European Directives on electronic communications
require that telecoms markets, including the calls to
mobile market, are reviewed before regulations are introduced
under the new Directives.
"I
will, therefore, shortly issue a consultation document
on my proposals for regulation of mobile call termination
charges under the new regime.
"The
Competition Commission's very thorough report and its
clear recommendations provide the best possible basis
for these proposals."
David
Edmonds said that there will be significant and immediate
benefits for consumers as a result:
"For
example, the price of a two minute peak rate call from
BT to a Vodafone customer could come down from 40p to
35p by the end of July.
"BT
have indicated that they will pass on the savings in
call termination charges to their customers. "Consumers
would save on average £18 in the last year of the charge
control for calls to mobile phones from fixed line phones."
David
Edmonds said that the Competition Commission believed
that the price cuts would not have an adverse effect
on the mobile operators' business plans.
"The
Commission have made it clear that these cuts will not
jeopardise the mobile operators as they will be able
to make a fair return on terminating calls to their
networks."
SOURCE
Oftel Press Release Back
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