Connected Research

Union policy research in the 21st century

Ofcom consultation on mobile termination

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Ofcom has today issued a consultation document on mobile termination rates to apply between 2011 and 2015, once the current regime has ended.

The current regime was established in 2007 and required termination rates – the rates which telecoms companies charge each other for calls made from one mobile phone network to another – to fall annually during the life of the charge control period. Ofcom believes that termination rates will have fallen by around one-quarter by 2011. The new consultation sets out six options and has been issued in the light of developments within the European Union on this issue under which it has been Recommended to national regulatory authorities that the fixed and common costs of running a mobile network may not be suitable for inclusion in termination rates. The six options for change are:

– deregulation: the removal of all regulation on termination rates

– charge controls set broadly on the basis of the same standard as applies today

– a revised methodology taking account of the EU Recommendation and allowing no recovery of common costs

– a fresh approach which sets rates based on the capacity required for termination

– mobile rates to be set at the same level as those applying to fixed operators

– termination charges to be set to zero.

Ofcom believes that ‘with the possible exception of deregulation’ all the options identified would lead to a reduction in termination rates. Some are complex and some are clearly likely to be more attractive than others, depending on the community taking the view. Ofcom has, as yet, no fixed view as to which of these is preferable, and is amenable to suggestions of other models which may be taken into account, but key in its approach will be the impact of each one on consumers. This indicates that it will be looking for an approach which sees termination rates fall further and – perhaps – ‘as far and as fast as [they] reasonably can, within the boundaries of sound economic policy and the legal framework.’

The consultation closes on 29 July.

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Written by Calvin

20/05/2009 at 1:27 pm

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