Ofcom MTR cuts draw criticism

UK regulator Ofcom will impose price caps on mobile termination rates that will slash wholesale access charges by 80% over four years.
 
The regulator hopes the caps, which come into force on April 1, will result in a reduction in call costs for consumers as carriers 3UK, O2, EverythingEverywhere and Vodafone pass on the savings made. Ofcom also hopes the price cuts will bolster the number of tariffs on offer.
 
Termination rates charged by O2, EverythingEverywhere and Vodafone will be cut from £4.18 pence (€4.81 cents) per minute to 0.69 pence by March 31 2015, while 3UK’s figure falls from 4.48 pence currently to 0.69 pence.
 
Changes were necessary to reflect a switch in operator’s main revenue stream from voice to data services, the regulator states. Mobile data traffic doubled in the past year, while data revenue grew 90% between 4Q07 and 4Q09.
 
The amended rates bring the country in-line with EC rules on MTRs that have already seen rates cut in Germany, and should see rates across all member states cut by €1.5 cents to €3 cents by end 2012.
 
While 3UK welcomed the move, its rival carriers lambasted the cuts, with Vodafone chief Guy Laurence telling WSJ.com they will result in higher costs for pre-pay users.

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