Price reductions in the UK mobile market

27 Mar 2007

UK telecoms regulator Ofcom has announced new controls on the amount that mobile network operators (MNOs) are able to charge other telcos for connecting calls on their networks. Ofcom expects the ruling to result in significant savings for consumers over a four year period. Under the ruling mobile voice call termination charge controls will apply – for the first time – to Hutchison 3G (3) and other 3G providers, as well as to 2G network operators which have already been subject to regulation. Taken as a whole, Ofcom expects an average annual reduction in wholesale charges of GBP400-GBP500 million over four years, savings which it expects to be passed on to retail customers.

Ofcom suggests that 3 be subject to charge controls of 5.9 pence per minute (ppm), a reduction of around 45% from current charges. The average wholesale charges of Vodafone, O2, Orange and T-Mobile will be reduced to 5.1 ppm 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 2007 and the expiry of the regulations in 2011.