Ofcom Announcement Due On Mobile Phone Termination Rates

It is believed that an announcement is due from OfCom (Office for Communications) on reducing the Mobile Termination Rates charged by Mobile Network Operators when a caller calls someone who is on a different network.

Currently, Mobile Networks charge typically 4p per minute for a call made to a phone number which is on a different network.

On April 1st 2010 OfCom announced that Mobile Termination Rates (MTRs) would be reduced over a 4 year period from the current 4p per minute to around 0.5p per minute in 2014.

The phasing in of the reduction is expected to occur as follows:

MTR to reduce to:

  • 2.5p per minute in April 2011;
  • 1.5p per minute in April 2012;
  • 0.9p per minute in April 2013;
  • 0.5p per minute in April 2014.

The author of this news item is aware that pressure has been placed on OfCom to tackle the high cost of cross network calls through a campaign called "Terminate The Rate".

With the cost of cross network calls reducing through proposed lower Termination Rates it is hoped that cost-per-minute competition will keep the cost of calls down rather than networks simply lowering the Termination Rate portion of a call and finding ways to add the call reduction into another breakdown part of the call.

A Termination Rate applies to a call that is made from a number on one network to a phone number on a different network.

The network of the called number charges the calling network a fee for using their network.

This fee is, ultimately, passed on to the calling person by means of a higher cost-per-minute call.

One reason why calls to numbers on the same network are often advertised as cheaper, or even free.

Update: 15 March 2011:

OfCom today announces the new schedule for reducing Mobile Termination Rates.

Rates will be reduced according to the schedule below:

  • 2.66p per minute in 2011 / 2012;
  • 1.70p per minute in 2012 / 2013;
  • 1.08p per minute in 2013 / 2014;
  • 0.69p per minute in 2014 / 2015.

Everything Everywhere, O2, and Vodafone, will be required to reduce their Mobile Termination Rates to 0.69p per minute in 2014 / 2015 from their current 4.18p per minute.

Update 24 May 2011:

O2, and Everything Everywhere which was formed as a result of the merger between T-Mobile and Orange, are believed to be actively removing pre-pay handset subsidies as a result of the reducing Mobile Termination Rates imposed by OfCom.

The removal of the Pre-Pay subsidies is aimed at counteracting the reduced revenue created by the removal of Mobile Termination Rates.

The subsidy removal is believed to begin from late June 2011.