Mobile calls to get much cheaper, Ofcom says

Ofcom plans to cut the price charged by mobile network operators for connecting calls from other network operators to 0.5p from 4.3p by 2015. The regulator...

Ofcom plans to cut the price charged by mobile network operators for connecting calls from other network operators to 0.5p from 4.3p by 2015.

The regulator also wants consumers to be able to change mobile operators within 24 hours, taking their numbers with them.

In proposals published today, Ofcom said the move will cut the cost of landline calls to mobile phones. The cut in so-called mobile termination rates will affect billions of calls a year, slashing mobile operators' income from connecting calls.

Ofcom said the move was possible because of very large increases in data volumes, which reduced the proportion of costs attributable to voice; a decline in the cost of network equipment; and the removal of the contribution by termination charges to the joint and common costs of the network.

However, mobile network operators face a potentially expensive auction for so-called 4G spectrum as well as a switch in underlying technologies from analogue time division multiplexing to digital Internet Protocol-based Long Term Evolution technology. But that switch should also lower capital and operating costs to mobile operators.

The move comes in the wake of a 2009 European Commission directive to cut termination rates to reflect the actual cost of completing calls. The present regime ends in March 2011.

Ofcom said the proposals mean that landline and mobile operators will have more flexibility in designing competitive call packages, promoting competition for the benefit of consumers.

Ofcom last set termination rates in 2007. Since then many smaller communications providers have entered the market. Up to 50 may be affected. These include mobile virtual network operators, voice over IP providers as well as the four national mobile operators: 3UK, O2, Vodafone and the merged Orange/T-Mobile.

"Today's consumers are as likely to send text messages or e-mails as make phone calls and mobiles are increasingly used to connect to the internet," Ofcom said.

Data traffic on mobile networks had risen 200% over the past year, it said.

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