REDUCING THE WHOLESALE COST OF MOBILE CALLS
June 11 2014.


The charges levied by operators for connecting calls to a different network – known as “mobile termination rates” – have fallen significantly in recent years. However, new proposals from Ofcom could further cut costs.


When a consumer calls a mobile phone user on a different network – either from a mobile or a landline – the network operator they are calling charges a “termination rate” to the provider with whom they are placing the call. This wholesale charge is part of the cost of delivering calls that providers consider when they set retail prices for consumers.

Ofcom concluded its last review of the market for mobile termination rates in 2011, imposing a control on the rates charged by the four largest network operators.

Since then, industry rates have fallen by around 80 per cent, from around four pence per minute (ppm) to around 0.8 ppm. This represents a significant fall from a decade ago, when termination rates were 14 ppm.

Ofcom is proposing via a consultation a new charge control, applying to all operators, which would mean termination rates would fall slightly further, to less than half a penny per minute by April 2017 in real terms.

The consultation on the proposals closes on 13 August 2014. Ofcom expects to publish its final decisions by March 2015.

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