3 told to cut rates
No special treatment
3 is getting too long in the tooth to play in the kids' pool. The Competition Appeal Tribunal yesterday ruled that the mobe co, not being such a new player any more, is going to have to cut its termination rates to be more in line with other operators.
Termination rates are paid to the called party's operator, and are capped to prevent operators abusing people calling their customers. Ofcom recently decided that cap should, over the next three years, drop to 5.1 pence a minute for the other operators, and 5.9 pence for 3 on the grounds that 3 are still a new entrant and need some protection.
That figure represents a 45 per cent cut in the rate 3 is charging today. The operator took Ofcom to the Competition Appeal Tribunal (CAT) to argue it should be exempted, as it still hasn't got the market clout to survive without more protection. The CAT disagreed, and 3 have had to find solace in the fact they are now considered to have "Significant Market Power", which means less protection from the competition.
In a related case, the CAT also decided that termination disputes between operators should be arbitrated by themselves, rather than Ofcom, which will have an impact on other ongoing termination-rate disputes.
Perversely, 3 is simultaneously lobbying to have all termination rates removed entirely, paving the way for pay-to-receive telephony, telling anyone who'll listen that getting rid of termination rates will lead to lower prices for everyone and (quite possibly) peace in our time. ®
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