3 UK ordered to cut mobile termination charge by 45%

21 May 2008

3 UK has been told by The Competition Appeal Tribunal that it must comply with an Ofcom decision which requires it to reduce the charges it imposes on rival companies to connect to its network by 45%. The tribunal dismissed 3’s appeal against the ruling saying concerns that the move could inhibit its path to profitability were of ‘limited relevance’. Ofcom said last year that 3 should come within its price control regime for the mobile termination rates that mobile operators impose on each other and fixed line telecoms companies for connecting calls to their networks. The tribunal noted that mobile operators had traditionally set the rates at levels ‘much higher’ than the costs of connecting calls to their networks. It said the operators had used some of the income to subsidise deals they offered customers. Ofcom added that the GBP0.107 (USD0.2) a minute average change levied by 3 should be cut to GBP0.059 by 2010-11. The tribunal agreed with Ofcom that 3 had significant market power and should come within the regulator’s price-controls regime.

United Kingdom, Hutchison 3G UK (Three UK)