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Tuesday, 15 March 2011

Ofcom, mobile termination rates and the future of telephone costs

Ofcom has today published its statement on the future regulation of mobile termination rates (see statement and press release).

The effect of this regulation will be to reduce the cost of calling mobiles, essentially to the same rate as those for calling Geographic Rate landlines. There will be other effects.

Mobile operators will need to recover the loss of revenue from incoming calls somehow. Ofcom predicts it as being likely that the whole structure of charging for use of a mobile phone will change. A serious danger is that the impact of this will fall most heavily on the "financially disadvantaged", who are commonly part of a diminishing group of PAYG users.
It will be highly likely that calls to mobile phones will join calls to Geographic Rate numbers by being primarily covered by inclusive call packages for landline users. This will cause the premium rates incurred when calling "Business Rate" 084 and 087 numbers, due to the inclusion of a "Service Charge" to the benefit of the called party, to stand out more clearly.
If public bodies, such as HMRC, DWP and NHS service providers continue benefitting from a Service Charge by using 084 numbers then they will be seen to be more expensive to call than a mobile!
The general restructuring of mobile charging will enable calls to 080 numbers to be made "free to caller" from mobiles without any excessive cost being imposed on those who receive them.

I am wholly in favour of this move, however the impact will need to be watched during its progressive implementation. Ofcom admits to the possibility of certain users of PAYG mobiles being priced out of the market, or having services on which they rely withdrawn.

Note: The consultation on proposals to require users of 084 numbers to declare the Service Charge that they impose on callers has been extended. Those who wish to support this proposal have until 31 March to present their responses to the consultation - Simplifying Non-Geographic Numbers.

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