Regulator Ofcom has come to its decision on the future of Mobile Termination Rates (MTRs). They are coming down significantly, just not as far or as fast as we and many others had hoped.
MTRs are the fees that mobile operators are allowed to charge to anyone that connects a voice call to their network, bumping up the price of calling mobiles.
Last April Ofcom set out its proposals to reduce the amount mobile operators were able to charge from 4.3p per minute to 2.5p in April 2011 with the price coming down each April to 0.5p in 2014.
The idea behind these changes is that mobile operators should only be able to charge a fee reflecting the true cost of that service, not an inflated fee.
Ofcom has stuck to its guns on the principle, which is good news. But it has opted for slightly higher figures than it initially suggested and still won’t make the full benefits of these savings a reality until April 2014.
Ofcom has ruled that from April MTRs must come down from around 4.3p per minute to 2.98p, eventually coming down to around a penny in three years’ time.
What does this mean for consumers?
From our perspective, the result secures big bundle deals like The One Plan and the more generous pay as you go bundles we introduced in anticipation of lower MTRs. Landline users, for years wary of the cost of calling mobiles, will get a better deal and, eventually even all-you-can-eat bundles of minutes as MTRs continue to be reduced.
Since the Terminate the Rate campaign launched in May 2009, our goal has been to make the cost of calling a mobile fairer. Terminate the Rate has received an incredible amount of support from over 160,000 UK consumers, over 65 organisations that represent the interests of tens of millions of people in the UK, 262 MPs and over 1,600 small businesses. This support has enabled the campaign to make a clear case for change.
On behalf of the Terminate the Rate Campaign we’d like to thank all the supporters the signed the petition and backed the campaign. Our supporters, many of them Three customers, have taken this from a hidden industry issue to the top of Ofcom’s agenda.
To take a wider view, this decision supports the Government’s call for regulation that supports competition and growth. While we’d like Ofcom to go further and faster in cutting this rate, Ofcom’s move is pro-competition and will drive further reductions in the cost of calls to mobiles for UK consumers.
The next big issue for competition and consumer pricing that Ofcom must address is that of spectrum, the radiowaves that power everyone’s smartphones and dongles. More of this crucial spectrum is becoming available for mobile users.
Smartphones mean that mobiles are fast becoming the internet access method of choice. The Government and Ofcom are at a fork in the road as they decide how that spectrum will be allocated to mobile operators. The decisions about to be made will determine whether smartphone users can continue to expect great pricing and all-you-can-eat data offers or whether prices will rise.