Ofcom orders mobile connection price cuts

Ofcom has concluded that Vodafone, O2, Orange and T-Mobile must reduce the prices they charge to connect calls to their networks, opening the door for price cuts for consumers.

The watchdog has maintained that average termination charges for Vodafone and O2 should be reduced from around 8p per minute to 5.63p per minute.

T-Mobile and Orange have been told to cut charges from around 9.5p per minute to 6.31p per minute.

The cuts apply to both landline and mobile calls to mobile networks. Much of the saving is expected to be passed on to consumers.

All four operators will be required to ensure that average charges in the period between the beginning of September 2004 and March 2005 reflect these reductions.

Ofcom said in a statement: "Average charges must then remain at that level until March 2006. As at present, mobile operators will be permitted to vary the charges by time of day."

The regulated charges, which will not apply to termination on new 3G networks, will be geared to reflect the differences in the properties of the two bands of spectrum: 900MHz (used by Vodafone and O2) and 1,800MHz (T-Mobile and Orange).

Ofcom's decision may bring to an end a process that began with referral in 1998 to the then Monopolies and Mergers Commission.

A spokeswoman for Orange said in a statement: "Orange does not agree with the conclusion of Ofcom's review that detailed regulation of mobile termination rates is necessary. However, we welcome an end to the uncertainty that this lengthy process has created.

"We want to ensure that the cost reductions required by Ofcom are passed on to consumers and will be liasing with Ofcom to ensure that BT reduces its retail rates in a timely manner."