Networks react to lowered termination rates

The UK's mobile networks have reacted to this morning's announcement from Ofcom, where it implemented a cap on the amount that mobile networks can charge for connecting mobile calls from landlines and other network phones.

It seems that networks are not happy about being instructed to charge significantly lower amounts than before.

Disappointed

A spokesperson from Vodafone told us: "We are really disappointed that Ofcom has ignored the evidence that termination rate cuts will mean higher costs for pre-pay customers especially at a time when money is tight for many families. We are studying Ofcom's decision and considering all of our options."

Disappointment also abounded on behalf of those 'vulnerable' pre-pay customers at EverythingEverywhere HQ, where a spokesperson said: "We are disappointed with Ofcom's decision and are currently reviewing the detail and our position as to whether we will appeal.

"Our concerns focus on the impact of the decision to our vulnerable pay-as-you-go customers. By applying pure LRIC methodology in setting call termination rates going forward, Ofcom has suggested we recover a larger share of our costs from retail charges.

"This may force us to change the pay-as-you-go model as we know it as a large number of these customers will now become uneconomical – making the way our consumers currently buy, use and enjoy their mobiles radically different going forward."

Deeply disappointed

O2 won the disappointment wars though, with a spokesperson telling us, "O2 is deeply disappointed that Ofcom has chosen to peg O2's mobile termination rate to the 'pure LRIC' cost standard. It results in charges that are too low.

"Ofcom continues to regulate other companies, including BT, on other, more generous cost standards and this is discriminatory.

"Pre-pay mobile customers are likely to be hardest hit by the reductions, and there is scant evidence that BT and other fixed companies will pass the lower costs to their customers."

According to BT, however, it has already said it will be passing on savings to its customers.

An air of disappointment

Three, a key member of the Terminate the Rate campaign which lobbied Ofcom for lower cuts to the termination rates, has been keeping fairly quiet about the whole thing.

A spokesperson for the numerical network told us that it has bigger fish to fry: "Three believes a competition issue of greater importance is at stake now – the auction of radio spectrum on which Ofcom is set to make a decision over the next few weeks."

In response to the other networks' collective disappointment, Three told us it's not all doom and gloom for Vodafone, O2 and EverythingEverywhere: "Termination rates have been coming down for years, and every time the lower pricing begets greater usage and more phone users."

Disappointment and anger

One company that wasn't afraid to say what it thinks while still retaining a bit of disappointment is USwitch. The comparison site banged its fist on the table (metaphorically speaking) as its technology expert Ernest Doku said:

"Consumers have been unwittingly lining the pockets of the mobile phone 'cartel' with billions of pounds. These hidden charges have up until now cost as much as 4p for every minute of every call made.

"It is still disappointing that Ofcom has not taken on board the European Commission's recommendation to reduce these rates in half the time, reaching 0.69p by the end of 2012 instead of 2014.

"Nevertheless, this is a clear victory against the bully boys. While termination rates have served as a tidy revenue for the big networks, the minnows in the market such as Three have struggled to make headway. There's no doubt that this news will really give a boost to competition in the mobile market."

So, essentially, no one is really happy with the new termination rates. It's a hard life, eh Ofcom?