Ofcom proposes to cut mobile termination rates in the UK to £0.005 (€0.005) per minute by March 2015,
The UK regulator says new rates are necessary to ensure new, smaller, communications providers that have entered the market since it last set rates in 2007 are able to compete on price, adding that reduced rates should also mean cheaper calls for consumers.
It proposes gradual cuts to the MTRs of O2, Orange, T-Mobile, and Vodafone from £0.043 at present, and 3UK from £0.046, with the price for new entrants and smaller players to be set on a “fair and reasonable basis.”
Ofcom hopes that smaller player’s rates will end up with rates broadly in-line with the UK’s leading mobile operators, which in turn will encourage other firms to enter the market.
Fitch Ratings estimates MTRs account for 12-15% of European mobile operator’s total service revenues, and that future cuts to the rates could result in a 2-3% drop in service revenue growth.
Ofcom’s proposals are open to consultation until June 23.