UK regulator to chop mobile termination charges

UK targets 0.5 pence a minute by 2015 while NZ's Commerce Commission recommends accepting 6 cents a minute by 2014

UK telecoms regulator, the Office of Communications (OFCOM), has announced plans to slash the cost of calling a mobile phone from another mobile or fixed telephone line.

The current rate is 4.3 pence per minute, which it wants to see fall to only 0.5 pence per minute by 2015, cutting bills for 32.7 million homes and businesses. OFCOM now plans to consult with operators Vodafone, O2, Orange/T-Mobile and 3, with the first three unlikely to be happy at an attack on what are known as 'termination rates' in telecom jargon.

By comparison, the final Telecom and Vodafone undertakings given to the Commerce Commission in New Zealand offered 10 cents a minute in 2011 sliding to 6 cents in 2014 (0.1 cents a second). The Commerce Commission was targeting an immediate halving of termination rates to 7.5 cents and a slide from there to 3.8 cents a minute in 2015.

In February, the commission voted 2 to 1 to recommend accepting the Telecom/Vodafone undertaking and the final decision on whether to do so now sits with communications minister Steven Joyce. The UK cut is likely to be welcomed by everyone else, but critics have pointed out that the networks will have five years to pass on the effect of the changes that will probably be paid for in higher charges elsewhere.

One area of concern is the cost of data roaming abroad, which is still sky-high.

According to broadband website Broadband Genie, downloading a £350MB TV show of film would cost a consumer in the region of £150 ($228) to download, with rates per megabyte ranging from 40 pence to £2.

"The cut in roaming rates in the EU has been well publicised, but it is just that — a cut. The problem is that prices started so high, a cut from ridiculously expensive has only brought it down to really expensive," said Broadband Genie's Chris Marling.

Last July, the EU slashed the cost of receiving and making calls while roaming abroad 0.46 euros to 0.43 euros, a modest but symbolic initial cut. By July 2010 this will fall to 0.39 euros, and 0.35 euros a year later. Operators were also ordered to measure calls by the second from the 31st second, rather than after a whole minute, as before. The operators that will benefit from OFCOM's plans are 3, the UK's smallest operator that wants to cut basic mobile costs in order to push consumers into new services on its 3G network, and fixed line giant, BT, which just wants everyone to make more phone calls. — Additional reporting by Computerworld NZ

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