Ofcom has announced lower mobile termination rates (MTRs) than expected. In fact significantly lower by the end of the five year period, down from 4.3p to 0.5p per minute.
Doubtless the major mobile operators will protest, as it will effectively reduce their income. Under the current system they derive net income from smaller players, fixed network operators, and call charges to their customers. Smaller players such as 3, which has been campaigning for lower charges, will welcome it, as MTRs represent a significant net cost to their businesses.
The lower costs announced will take the charge much closer to the zero cost that operates under the ‘Bill and Keep’ system. This applies in countries which operate the ‘called party pays’ system, such as the USA and several Far Eastern countries. In these markets the average price of calls is usually significantly lower, usually less, and often much less, than 5p per minute, and international calls to those countries are the same for calls to both fixed and mobile operators, even when made through low cost players such as Skype. With the reductions announced by Ofcom, users can hope that competitive pressures will push prices in the UK down to similar levels. However they will need to be aware that operators will be seeking other ways of recouping the lost revenue.
If coupled with similar actions in other EU countries, as is being encouraged by the EC, users can also reasonably hope for reductions in roaming charges.