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28th March - Ofcom announced new charge controls limiting
the amount that mobile network operators (MNOs) are able to
charge other telephone companies for connecting calls on their
mobile networks. Ofcom expects this to result in significant
savings for consumers over the four year period that the charge
controls will apply.
For the first time, mobile voice call termination charge
controls will apply to Hutchison 3G (3) and other providers
of 3G services, as well as 2G network operators who were previously
subject to regulation. Taken as a whole, Ofcom expects an
average annual reduction in wholesale charges of £400-500
million over four years; savings which Ofcom expects to be
passed through to retail customers.
Ofcom has decided to reduce the level of average wholesale
charges across the board.
• 3 will be subject to charge controls of 5.9 pence
per minute (ppm) in today's prices, a reduction of around
45% from today's charges.
• The average wholesale charges of Vodafone, O2, Orange
and T-Mobile will be reduced to 5.1 ppm in today's prices
and will apply when connecting calls on both 2G and 3G networks.
• For Orange and T-Mobile this represents a reduction
of around 20%; and for Vodafone and O2 a reduction of around
10%.
• The reductions from current levels will take place
in a number of stages between 1 April and the expiry of the
regulations in 2011. Mobile call termination market review
The current charge controls expire on 31 March 2007. In June
2005 Ofcom began a review of the market to decide whether
regulation remain necessary.
Today's statement marks the conclusion of this review. Following
extensive consultation, Ofcom has decided that:
• Each of the five MNOs (3, O2, Orange, T-Mobile and
Vodafone) continues to have significant market power in the
market for termination of voice calls on its network(s). Charge
controls therefore remain necessary to protect consumers from
unduly high prices;
• the charge controls should apply for four years from
1 April 2007; and
• each MNO must connect calls to its network from any
operator on a fair and reasonable basis, and charges should
be transparent. Separately today, Ofcom has published a consultation
on whether to amend the charge control for each of the five
MNOs in light of concerns that operators may not have the
right incentives to offer number portability to consumers
that wish to switch to another network. The closing date for
responses to this consultation is 5 June 2007.
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