Mobile operators charge each other and fixed networks for
terminating calls onto their mobile networks, and these charges are
passed directly to the consumer making the call.
Oftel believes that the charges are too high. In 2001, the
telecoms regulator issued proposals for cost reductions. The mobile
phone companies, however, rejected these proposals and referred the
case to the Competition Commission.
According to Oftel, Vodafone, O2, Orange and T-Mobile are
currently overcharging customers by up to 40% for calls to rival
networks. Oftel said: "callers to mobile phones have no choice but
to pay the termination charge set by the mobile operator, which
means that there is little incentive for the operators to reduce
their charges towards their actual cost."
Therefore, Oftel decided, there will be a one-off 15% cut in
connect call charges by July 2003. This will be followed by three
further annual price reductions of up to 15%, depending on
inflation rates.
Although Oftel claims that the new rules will not jeopardise the
operators' profits, the mobile phone firms have already expressed
their opposition to the new price plan.
Vodafone claimed that the Competition Commission's report is
"flawed", and said it plans to seek a judicial review of Oftel's
decision. The company also claimed that the price cuts are against
the interests of consumers, which will end up paying more for
buying and using mobile phones.
Part of the Competition Commission's report is available
here
