Mobile phone providers will undoubtedly find ways of making up for lost revenue.
Chris Frost, Telecoms Expert at independent price comparison and switching service uSwitch.com, comments: “Ofcom today announced new charge controls limiting the amount that mobile network operators (MNOs) are able to charge other telephone companies for connecting calls on their mobile networks. Ofcom expects an average annual reduction in wholesale charges of £400-500 million over four years, savings which Ofcom expects to be passed through to retail customers.
“The new ruling by Ofcom, will come into effect this Sunday, but it remains to be seen whether this will be a victory for consumers. In theory, this should result in significant savings for customers over the four year period in which the charge controls will apply. In practice, it is only the phone operators that have the power to decide whether customer bills will come down. The introduction of a connection charge ceiling means that the networks have to charge telephone companies calling them less per call but it doesn’t guarantee lower bills for home phone or mobile customers as retail prices will continue to be set by the industry giants.
Frost continues: “Following this latest move by Ofcom and the impending announcement of the results of the EU’s investigation into roaming charges, mobile operators could be set to lose millions in revenue. Any loss of earnings could result in a backlash for consumers as phone providers will undoubtedly find ways of making up for lost revenue. We could witness a dramatic fall in the number of ‘free’ handset deals as well as a revision in pricing plans.
“However, it is important to remember that mobile phone companies will benefit from substantial cost savings every time their customers make calls to rival mobile networks. Undoubtedly, the big winners are the fixed networks such as BT, Talk Talk and Virgin Mobile as it will cost them less to connect a call to a mobile network.
“We urge all operators (particularly the home phone operators) to pass on these savings to customers, particularly to all those customers tied into 12 or 18 month fixed term contracts. Ofcom expects an average annual reduction in wholesale charges of £400-500 million over the next four years, if these savings are to passed on to retail customers Ofcom will have to keep a watchful eye to ensure that any cost saving announcements are not made immediately redundant by the introduction of new hidden charges to make up for lost revenue streams.”
Ofcom has decided to reduce the level of average wholesale charges across the board :
3 will be subject to charge controls of 5.9 pence per minute (ppm) in today’s prices, a reduction of around 45% from today’s charges. The average wholesale charges of Vodafone, O2, Orange and T-Mobile will be reduced to 5.1 ppm in today’s prices and will apply when connecting calls on both 2G and 3G networks. For Orange and T-Mobile this represents a reduction of around 20%; and for Vodafone and O2 a reduction of around 10%. The reductions from current levels will take place in a number of stages between 1 April and the expiry of the regulations in 2011.
For more information or to compare digital TV, broadband, mobile phone or home phone packages visit www.uSwitch.com or call 0800 093 06 07