UK commission recommends lower termination rates

The UK's largest mobile operators could be forced to cut termination rates under a ruling from the UK Competition Commission, the Financial Times reports.

O2 , Vodafone, Orange and T-Mobile were told they should introduce a cut of 22% to reduce connection charges to 4p a minute by 2010-11.

Ofcom had ruled in March 2007 that the big four should cut charges for connecting calls to their networks to no more than 5.1p a minute by 2010-11. These cuts are under way now.

At the time of Ofcom's ruling, 02 and Vodafone were levying 5.6p, and Orange and T-Mobile 6.3p a minute, the FT says, representing about 15% of their revenues (£2.5 billion a year) by Ofcom's estimate.

BT mounted a legal challenge to Ofcom's decision, pointing out that only charged about 1p a minute for connecting calls to its fixed line network.  3, the smallest mobile operator in the UK, owned by Hong Kong's Hutchison Whampoa also complained that the charges were still too high.

The competition appeal tribunal referred the level of mobile termination rates to the Competition Commission in March 2008. The tribunal will have to decide whether to accept the Commission's recommendations.

The tribunal is to hold a hearing involving Ofcom, the big four mobile operators, BT and 3 on February 2.

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