ISPs win appeal, landline-to-mobile cap to drop 85pc

Aside from conducting research studies, Ofcom also has the authority to propose and call for the implementation of price caps. It recently set out to lower the prices that BT charges for the services being offered by its infrastructure division, Openreach.

It tried to do the same last year with mobile termination rates (MTRs), but this move was highly contested by providers BT Broadband and Three UK. These MTRs are the fees that operator A would charge operator B in order for operator B’s users to place a call to users on opeatror A’s network.

Ofcom earlier proposed for these rates to be cut down by eighty percent by the 2014-2015 period. The two mobile operators protested that these cuts were too shallow, and that the timescale the regulator had set was too long.

Now the decision on their appeal has been revealed, and the UK Competition Commission has announced that they agree with BT and Three. The commission then proposed cuts of 85%, which is based on the MTR level that was in place in the 2008-2009 period. Furthermore, it has brought forward the deadline of 2013-2014.

The appeal will be forwarded to the Competition Appeal Tribunal, who will decide on implementing the decision or not.

In a statement, BT said: “BT welcomes the Competition Commission’s endorsement of the approach Ofcom took last year. We are particularly pleased that the CC has upheld our view that Ofcom should have brought forward its low-rate target by a full year.”

It added: “Despite vigorous attempts by the incumbent mobile operators to have Ofcom’s approach overturned and so increase the rates they can charge for terminating calls, the CC has decided that wholesale mobile termination rates should be reduced even further. We trust the Competition Appeal Tribunal will now bring the CC’s decision into effect as swiftly as possible.”

Vodafone, however, was disappointed, stating: “We are very disappointed that the Competition Commission considers that deep cuts in MTRs are necessary, because it will further harm consumers.” The operator went on to say: “We warned Ofcom at the time of its original decision that drastic cuts in termination rates would disenfranchise many consumers who rely on their phones to keep in touch with friends and family.”