Ofcom bids to cut mobile call costs
The cost of mobile calls between networks is set to fall to the lowest level yet under proposals announced by Ofcom.
The regulator is proposing a new charge control on all operators which would mean mobile termination rates - the fee operators bill each other for connecting calls - would fall to less than 0.5p a minute by April 2017.
The rates have fallen significantly in recent years, from almost 25p a minute in 1995 to around 0.8p, and Ofcom said today's announcement would see this trend continuing.
This wholesale charge is part of the cost of delivering calls that providers consider when they set retail prices for consumers.
Ofcom concluded its last review of the market for mobile termination rates in 2011, imposing a control on the rates charged by the four largest network operators.
It said the mobile market had changed significantly since it last reviewed these charges, and the amount of spectrum available to provide mobile services had increased dramatically following the release of 4G spectrum auctioned by Ofcom last year.
All four of the largest mobile operators have now launched competing 4G networks, with each aiming to cover around 98% of the country by next year.
These networks are currently used for high-speed mobile broadband, but operators are expected to start using them for voice calls in the near future.
Mobile networks and technologies are also becoming more efficient, leading to lower costs, and the new charges are designed to reflect this, Ofcom said.
Ofcom's competition policy director Brian Potterill said: "Consumers in the UK benefit from a thriving competitive market, and mobile calls have never been cheaper. The average cost of a call bundle has fallen from £40 to around £13 in real terms over the last ten years.
"We want to ensure mobile users continue to benefit from competition, which will deliver affordable services in the years ahead."
The consultation on the proposals closes on August 13 and Ofcom expects to publish its final decisions by March 2015.
Dominic Baliszewski, telecoms spokesman at broadbandchoices.co.uk, said: " Anything that makes mobile phone calls cheaper is ultimately a good thing and we would expect these wholesale cost reductions to be passed on to the customers. However it is important to remember that call rates are already pretty good value - data is where customers are really spending money, especially on 4G tariffs.
"Mobile data traffic is widely predicted to skyrocket over the next five years as mobile device ownership increases, while mobile phone call volumes are expected to decline. Cheap phone calls are nice to have but if fewer and fewer people are using them it is a moot point. Customers need more generous data allowances coupled with fairer 'excess usage' penalties if they are to avoid being stung financially.
"It is still impressive nevertheless to see how much overall call bundle costs have fallen over the last 10 years, highlighting the importance of switching regularly to take advantage of lower prices. With one in four mobile phone customers recently admitting they can't be bothered to switch mobile phone network, there are a lot of people who stand to save themselves a considerable amount of cash simply by switching."