Page last updated at 11:02 GMT, Thursday, 1 April 2010 12:02 UK

Mobile phone charges to fall under Ofcom plans

Mobile phone
The latest rulings should come into effect by 2011

Callers to UK mobile phones could see cheaper bills from 2011 under plans announced by telecoms regulator Ofcom.

It has proposed cutting the cost mobile phone firms can charge for connecting a call from another network from 4.3 pence per minute to 0.5p by 2015.

Ofcom has also issued new rules to make it quicker and easier to switch mobile phone providers.

Customers should, by 2011, be able to change mobile providers in one working day rather than two.

In addition, mobile phone companies will have to issue users with the Pac code they need in order to keep their existing mobile number by text message within a maximum of two hours, Ofcom said.

Some 16% of their UK revenue comes from these charges. So they'll try and recoup it - perhaps by putting up the cost of so-called data traffic, or what they receive when you send texts or access the internet on your mob, or possibly by reducing the subsidy they pay on handsets.
Robert Peston, BBC business editor

Currently, some mobile phone companies only issue these codes by letter, which can mean switching takes several days.

But the move did not go far enough for mobile phone operator 3.

"The UK is the only country in Europe where you have to ask permission from your current operator to leave and take your mobile number with you," a spokesman said.

"[In other countries,] consumers benefit from near-instant porting and don't have to ask permission to move their number."

Ofcom research shows that 70% of customers want to keep their mobile number when they change providers.

Significant revenue

Both sets of proposals are subject to short consultations later this year.

On the issue of mobile phone charges, Ofcom said the changes would mean cheaper calls to mobiles for the more than 32 million households and firms with a landline, saving consumers a total of £800m over the four-year period the charges have been set for.

However, analysts have warned that as these fees, known as termination charges, can account for about 15% of mobile phone companies' revenue, they could look to recover the money elsewhere.

"This is not small money. They are going to look to make this up in other areas. It may be they decide to increase prices for less price-sensitive customers," telecoms analyst Matthew Howlett told the BBC.

BT has pledged to pass on the reductions to consumers. But it expressed concern that consumers and businesses would not see the full benefit of lower rates until 2015 under Ofcom's plans.

"In this case, what is being proposed is just the elimination of excessive prices and the mobile operators have had plenty of notice that termination rates are likely to fall," the company said in a statement.

Ofcom's latest proposals follows instructions from the European Commission last year that charges should reflect only the cost of establishing connection.

These fees, called termination charges, have fallen substantially as mobile phone usage has grown. In 1995, the cost was 23p per minute, Ofcom said.

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