Mobile calls to get much cheaper - probably

UK regulator Ofcom has published proposals to cut the mobile termination rate significantly and make changing networks quicker, but stopped short of routing calls directly.

A lower termination rate should see cheaper calls to mobiles - £800m cheaper according to Ofcom. Under the proposals customers will be able to get a PAC code in two hours and be connected to a new network within a day, but Ofcom declined to enable recipient-led porting or set up a central database to prevent your old network retaining ownership of your number.

The current system for changing networks is "donor led" - one has to call up one's existing network and ask for a PAC (Porting Authorisation Code) which can be passed on to the new network. Networks have always been reluctant to hand out PACs, and it's worth requesting one every now and then to see how your operator reacts, especially now they'll now be required to provide a PAC within two hours - leaving little time for the customer retentions team to be in touch.

The alternative is a "recipient led" system, where the network you're moving to does all the work. Ofcom reckons that this is a better choice, but not by enough to justify the cost of a switch.

Direct routing was also dropped. In the UK network operators own phone numbers, so if your number was given to you by Vodafone then all calls to that number are still routed to Vodafone, and will be forever. If you opt to change networks Vodafone will forward them to whomever is providing your service these days. Ofcom considered mandating a central database of numbers and their owners, but decided it wasn't worth it, particularly as the principle objection is about to disappear.

That objection is based on a disparity in termination rates - the fee paid to the network receiving the call. Right now that's 4.6 pence per minute for 3, and 4.3 pence for everyone else. The difference is to make up for 3 being late to the party. When a call is forwarded the calling network only pays the termination fee of the network owning the number, so 3 loses out.

That difference will disappear in May next year when the rate for all the operators is cut to 2.5 pence per minute, and will then continue downwards annually until it reaches 0.5 pence in 2014.

Which will apparently save the UK consumer £800m in call charges, though one assumes the operators will want to extract that revenue from elsewhere. 3, which hosted a call on the subject this morning, reckons it will lead to more-flexible tariffs and more unlimited bundles, but we're struggling to see how the industry is going to lose £800m a year without some pain.

These are just consultations at the moment, the big operators will probably say it can't be done. There's still time for more legal challenges and robust discussion, but it looks like the day when a mobile call costs almost as little as one to a fixed line isn't far off - well, four years off. ®