UK mulls next move on mobile termination rates

The UK’s regulator, Ofcom, has published a review of how to regulate mobile termination rates from 2011, when the current regime ends, to 2015.

Ed Richards, CEO, Ofcom, stated, “The role of termination rates in mobile services has attracted enormous controversy. That is why we are determined to examine them from first principles. This consultation gives consumers and industry an opportunity to debate the fundamental questions.”

3, the UK’s smallest operator in terms of subscribers, is launching a campaign later today to publicise and explain the issue to consumers, spearheaded by CEO Kevin Russell. A spokesperson wouldn’t give details, but said it will emphasise how the current regime is anti-competitive because termination rates leave limited room for manoeuvre on price and bundling, and bears no relation to the cost involved in terminating calls.

3 has campaigned long and hard for a more dramatic reduction in termination fees on the grounds that it pays a disproportionate amount to other network operators for terminating calls that originated on its network. Last summer Russell gave evidence on the subject to the Competition Commission.

Ofcom’s consultation sets out six options including maintaining the current system, which has already 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.

Ofcom says that some of the review’s options are “radical” alternatives to the current arrangements and says most of the options are likely to reduce the termination rates, although it expresses the opinion that the possible outcome of the deregulatory option – whereby termination regulation will be abandoned in favour of a free market option – is “uncertain”.

In 2007 Ofcom set the framework for wholesale termination rates to fall annually until 2011, resulting in them dropping by about a quarter over that period. The review looks at how rates could be set from 2011 to 2015, allowing a consultation period before the current regime expires.

 

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