Mobile termination rates: options to benefit UK consumers

Ofcom has published a review of mobile termination rates – the wholesale charges that operators make to connect calls to each others’ networks – to ensure that they benefit UK consumers.

In 2007 Ofcom set wholesale termination rates to fall annually until 2011. This will result in termination rates falling by around a quarter over that four year period.

The review examines how rates could be set from 2011 to 2015 allowing a thorough consultation ahead of expiry of the current charge controls.

Lower termination rates are likely to mean that mobile operators have more flexibility in designing competitive call packages, and pass these benefits and any reduced prices onto consumers.

The consultation sets out six options including maintaining the current system, which has already seen rates come down year on year, to a system where the customer’s own network is responsible for all costs of making and receiving phone calls.

Some of the options are radical alternatives to the current arrangements and Ofcom is exploring a range of options to ensure the best outcome is secured for consumers in a changing mobile market.

Ofcom expects that most of the options are likely to reduce the current termination rates. The possible outcome of the deregulatory option – where termination regulation will be removed from mobile operators – is uncertain.

Ed Richards, chief executive of Ofcom, said: “The role of termination rates in mobile services has attracted enormous controversy. That is why we are determined to examine them from first principles. This consultation gives consumers and industry an opportunity to debate the fundamental questions.”