Landline to mobile costs set for cuts

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Landline-to-mobile phone calling may become cheaper sooner thanks to the Competition Commission's support for appeals made by mobile operator 3 and BT.

Last year, Ofcom stated that mobile termination rates (MTR's) would have to fall by 80 per cent before 2014-15. BT and 3 said Ofcom did not go far enough.

Now the Competition Comission has sided with BT and 3 complaints, proposing to increase the cuts to 85 per cent and move the deadline up one year to 2013-14.

The decision has reportedly caused uproar with competing companies Everything Everywhere, O2 and Vodafone. They argue that the proposed cuts are too steep and the deadline too soon.

We trust the Competition Appeal Tribunal will now bring the CC’s decision into effect as swiftly as possible.

It is now left up to the Competition Appeal tribunal to enforce the decision.

“We welcome the Competition Commission’s endorsement of the approach Ofcom took last year and we’re particularly pleased that the CC has upheld our view that Ofcom should have brought forward its low-rate target by a full year," a BT spokesman said.

"Despite vigorous attempts by the incumbent mobile operators to have Ofcom’s approach overturned, and so increase the rates they can charge for terminating calls, the CC has decided that wholesale mobile termination rates should be reduced even further. We trust the Competition Appeal Tribunal will now bring the CC’s decision into effect as swiftly as possible.”

3 is also pleased with the verdict and believes the changes will be in the best interests of mobile users.

“This determination suggests the competition and consumer benefits made possible by Ofcom’s move to reduce mobile termination rates are here to stay. This is good news for phone users – both fixed and mobile,” a 3 spokesman said.

However, Vodafone has stated the changes will have negative effects on customers.

"We are very disappointed that the Competition Commission considers that deep cuts in MTRs are necessary because it will further harm consumers," the mobile operator said.

Vodafone has cautioned that the cuts would increase costs for pay-as-you go customers and the loss of profits caused by the cuts would have to be paid for by customers.

Ofcom has stated they are "broadly happy" with the Competition Commission's decision and the final outcome of the appeal.

“Ofcom welcomes the Competition Commission’s final determination on mobile termination rates. In particular, Ofcom is pleased the Competition Commission has endorsed Ofcom’s decision to reduce significantly termination rates which will bring competition and consumer benefits," an Ofcom spokesman said.

"Ofcom also notes the Competition Commission‘s conclusion that the benefits of lower rates should be brought forward by a year.”

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