Mobile phonecos braced for tough price cuts

Competition report due out next week

It appears that the UK's mobile phone operators have lost their fight to stave off enforced price cuts following a year-long investigation by the Competition Commission.

The FT reports that termination charges - the fees service providers charge for routing calls from other operators through their networks - could be slashed by 15 per cent with a further 14 per cent reduction over three years.

Any price cuts would be implemented from April, according to the newspaper.

News of the tough price cuts appears to have come from a leaked report, which is expected to be published by the Competition Commission next week.

In January last year, telecoms regulator Oftel formally asked the Competition Commission to investigate whether the charges mobile operators make for connecting calls to their networks were too high.

Oftel referred the matter to the Competition Commission after the mobile phone operators rejected inflation-busting price controls of Retail Price Index (RPI) minus 12 per cent for the next four years.

Oftel said that mobile termination rates were "substantially in excess of cost".

In July, the Competition Commissioner told mobile operators they were charging too much for connecting calls from other networks and recommended that prices be capped.

Mobile phone operators argue that any price cuts would be against the long-term interests of consumers. ®

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