UK mobile phone companies to be forced to cut prices

Telecoms watchdog Ofcom is set to pave the way for cheaper phone bills by forcing mobile phone firms to cut call charges.

The regulator is likely to rule that phone companies should lower the cost of connecting calls from one network to another.

Mobile groups are thought to charge each other around £2 billion a year in connection fees.

While the fees have been coming down in recent years, there are worries that they are still contributing to excessive profits and disadvantaging consumers.

Cutting so-called termination rates could shave at least £1 billion a year from customers’ bills, according to reports – as well as giving a more level playing field for smaller networks.

The current regime of termination charges was set in 2007 but is due to expire next year. The regulator’s latest ruling will set rates until 2015.

Last year, the watchdog said it was considering “radical alternatives” to the current arrangements in a bid to give operators more flexibility to design competitive call packages and pass on benefits to consumers.

The consultation set out six options for the future of the charges, from maintaining the current system – which has 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.

Last May, the European Commission (EC) issued guidance which said that the rates at national level should be based only on the real costs an efficient operator incurs to establish the connection.

Source: Press Association