Mobile Call Costs, the Networks strike back !

Mobile operators strike back over Ofcom MTR proposals. O2, T-Mobile, Vodafone and Orange have stated that Ofcom’s recent mobile termination rate (MTR) proposals are ‘deeply flawed’ and are likely to result in price rises for end users rather than the anticipated cost reductions.

 On the 1^st April Ofcom set out proposals to cut mobile termination rates, the costs mobile operators charge other telecoms companies for carrying their traffic over their networks. Ofcom argues that this will lead to cheaper calls for consumers and much of the resulting press coverage has suggested that operators have been overcharging thanks to these costs.           

 An O2 spokesperson remarked: “To say that Ofcom’s proposal will lead to cheaper calls for UK consumers is both simplistic and misleading. We are a business and if our business model changes we have to do something to compensate. We have spent over £10 billion on our mobile network to date, and with surging demand for data and the requirements of next generation networks, we have earmarked hundreds of millions of pounds more to invest.   If we cannot recoup some of this investment through mobile termination rates, we have two choices. Either we raise prices in other areas, such as Pay & Go or data, and cut handset subsidies, or we cut back on our investment”.  

Very similar statements were made by the other mobile operators echoing O2’s stance that a cut in MTR would cause either reduced investments or price increases in other areas. They also point out that the UK is the most competitive mobile market in Europe with margins well below all other EU countries and that there is no evidence of excessive profit taking or overcharging. 

Formal responses from the mobile operators to Ofcom’s current MTR proposals will made shortly. This argument is far from over !