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Vodafone says termination rate clampdown would hit the poor

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Vodafone today claimed 40 million Europeans will be forced to drop their mobile phone service if EU-led moves to scrap the current call termination charging system go ahead.

Pay as you go users who make fewer outgoing calls would face big retail price hikes if operators lost revenues, the firm said. Those typically poorer customers would be the ones forced to switch off, it claims.

A submission to media and information society Commissioner Viviane Reding, Vodafone said that US-style charging of customers for receiving calls would cause prohibitive price increases to consumers, the Financial Times reports.

The submission has been passed to the paper just days after Ofcom said it would consider the US system in its review of termination rates. It'll form part of the evidence for Reding's consultation on termination rates.

Vodafone said its survey of 9,000 mobile phone users showed significant resistance to the notion of paying to receiving calls.

The current system sees the network where the call originates bear all the cost of the call. Reding has said several times that she believes this is anti-competitive, as smaller networks must pay out more, while the big players broadly break even. In the UK all operators except 3 would like to see the current regime remain in place.

Reding plans to impose a cut in termination rates from an average of €0.08 per minute to less than €0.02 per minute by 2012.

Proponents of the US system, where the costs of calls is shared by the originating and the receiving network, argue that increased competition means consumers get a better deal. US mobile subscribers typically pay less for calls than their European counterparts. ®

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