Regulator wants cheaper fixed-line-to-mobile calls

Calls from fixed lines to mobiles could become cheaper if proposals by the telecoms regulator come into force.

Ofcom's plans follow a review of its regulation of "termination rates" — the current regulation of which are due to expire in March next year.

Speaking to ZDNet UK on Wednesday, a spokesperson for Ofcom said the regulator was following guidelines laid down by the European Commission to investigate any instance of unfair market dominance.

"If I phone your Orange mobile, there's only one company that can connect me to you and that is Orange," an Ofcom spokesperson explained on Wednesday, adding: "We are instructed by the European Commission to do something about that where we find that kind of market dominance."

Termination rates refer to the charges levied by one operator on another, when a customer of one network calls a mobile phone on another network.

The European Commission has recently been taking a keen interest in mobile operators' charges, with particular emphasis on roaming fees — an issue that also relies on termination rates.

Ofcom thinks the current termination system is unbalanced — T-Mobile and Orange, for example, charge more (6.31p per minute) to receive a call than Vodafone or O2 (5.63ppm) — and it wants to gradually "slide" all operators down to a level of 5.3ppm.

As for the 3 network, whose termination rates are not currently regulated at all, Ofcom wants to set a limit of 6ppm as it says it costs more to receive calls on a 3G network.

A spokesperson from Orange told ZDNet UK on Thursday that it welcomed Ofcom's proposals, particularly in terms of the discrepancy between 2G and 3G charges, and "looks forward to responding to Ofcom's consultation to identify a sustainable and fair solution to addressing the call termination issue in the longer term". Sources within T-Mobile expressed a similar reaction.

The changes would not make much of a difference to customers' mobile phone bills, said Ofcom's spokesperson, as the lower charges for phoning another network would be offset by cuts the operator would have to make in its own charges to other networks.

But calls from fixed lines to mobiles should become cheaper. "For example, it will cost BT less to connect to mobile networks and we would certainly expect the savings to be passed on to the consumer in some way," the spokesperson explained.

The consultation on the proposals is due to finish on 22 November and, if adopted, they will be in place by April 2007, to be reviewed again in 2011.

Ofcom also has the wholesale SMS market in its sights — it has promised a lengthy review of the prices charged to send text messages between networks, to start next year.