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Last Updated: Friday, 27 June, 2003, 15:55 GMT 16:55 UK
Phone charges to be cut
Mobile phone
Cost of making calls to mobiles should fall
The cost of calls to mobile phones will fall by up to 50% over the next three years, following a High Court ruling.

It is the end of a long-running battle between mobile phone giants Vodafone, Orange and T-Mobile with regulators over so-called "termination charges".

That is the amount charged by mobile operators for accepting calls from landline phones or rival mobile phone networks.

The High Court ruled mobile firms were charging far too much for calls from these services.

Price 'strait jacket'

The new rules - which will begin to come into effect at the end of next month - could save consumers 190m each year until 2006.

How much will you save?
On average consumers will save 18 per year by 2005-06
Termination charges will be cut by 15% from 25 July
After July termination charges will be capped at the inflation minus 15% for mmO2 and Vodafone, and inflation minus 14% for Orange and T-Mobile.
Source: Oftel

The latest estimate from Oftel is that by 2006 the cost of a call from a BT fixed line to a mobile will fall from 17p/min to 12p/min on average.

As for cross network mobile phone calls, the average cost will fall from 24p/min to 19p/min.

But the changes will come as a blow to the mobile industry, which has accused the authorities of placing it in a "financial strait jacket".

Fairer deal

The first price cut of 15%, on services affected by the ruling, will come into effect at the end of next month.

Similar reductions will follow in the subsequent three years until 2005-6, now that the court challenge has been unsuccessful.

Consumer groups have welcomed the ruling as finally clearing the path for a fairer deal for consumers.

"The mobile phone companies have dragged their feet all the way they have been making a fortune at consumers' expense," Diane Gaston spokesperson for the National Consumer Council (NCC) told BBC News Online.

But there is concern the ruling could lead to a big increase in the cost of mobile handsets.

Handset warning

Mobile phone companies in the UK have traditionally offered cheap handsets, recouping their investment through phone charges.

But T-Mobile has already warned that operators were now likely to cut the handset subsidy, leading to a considerable increase in their cost.

"The Competition Commission did not suggest mobile phone operators weren't entitled to recoup their investment, just not in this way." a T-Mobile spokesperson said.

Consumer watchdog the NCC has said it will be watching mobile firms next step closely.

'Reasonable and justified'

The Competition Commission first proposed mobile call price cuts in January following its year-long review into the issue.

The review had been prompted by the mobile phone operators' refusal to accept cost reductions proposed by regulator Oftel two years ago.

In the High Court on Friday, Mr Justice Moses ruled the Competition Commission were entitled to take action against the firms.

He said the commission had adopted "a reasonable and justifiable approach".

The court has given the mobile firms leave to appeal.

A fourth mobile giant, mmO2, was not a party to the application for judicial review.




SEE ALSO:
Q&A: Mobile phone price cuts
27 Jun 03  |  Business
Mobile call charges too 'high'
23 Jul 02  |  Business
Watchdog probes mobile phone firms
02 Apr 02  |  Business


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