3 told phone tariffs have to come down

21 May 2008 17:36 GMT / By Katie Scott

Two court cases could have a significant impact on how much it costs to call mobiles from landlines and between mobile networks.

First in the dock was BT, which has won its case before the competition appeal tribunal (CAT).

The telecoms company had argued that the so-called "mobile termination" rates, which in its case, affect how much it costs to call from a landline to mobile networks, should come down.

In particular, it argued that the consumers are overcharged to the tune of £1bn a year, and that the way Ofcom calculated price drops in the past was wrong.

The decision only concerned the price setting from September 2006 to March 2007 - which was before the latest caps for termination rates came into force, but could impact on how Ofcom operates in the future.

The present caps are being investigated by the tribunal and its findings will be published on 31 October.

And it was the present caps that were being debated in a second case before CAT.

Under the latest Ofcom plans, the rate that 3 can charge for calls between different networks will fall 45% to 5.9p a minute over the next 3 years.

The other four networks will see prices drop to 5.1p, which works out as a 10% cut for Vodafone and O2, and 20% for Orange and T-Mobile.

But 3 is arguing that it should be excluded from the current set of caps.

But CAT supported Ofcom's view that 3 should not be exempt because, although the newest company, it still has "significant market power".

3 is not happy about the judgement, but has actually, in the past, argued that we should get rid of termination rates all together in the UK.

Full tags

Phones, Biz, Mobile phones, Ofcom, BT