Networks fight Ofcom over calls between them
The Competition Appeal Tribunal has asked the Competition Commission to judge an appeal by BT and UK mobile operators against an Ofcom plan to lower the costs of calls between networks.
Ofcom said in March it wanted the so-called mobile termination rate to drop from 4.18p (4.48 for Three) to 0.69 between 1 April 2011 and 1 April 2014.
Mobile termination rate caps (pence per minute)*
|Current rates until 01/04/11||20011/12||2012/13||20013/14||2014/15|
|02, Everything Everywhere
The network operators claim that the regulator used the wrong formula to work out the cost. If the Competition Commission upholds the appeal, the cost of phone calls from one network to another will stay relatively high, pumping billions in operators’ coffers.
The extra cash could give the operators more latitude in bids for spectrum in the upcoming auction for frequencies in the 800MHz and 2.6GHz bands, the so-called 4G mobile bands. It could also help speed up investment in LTE (Long Term Evolution) technology for 4G networks.
Europe’s Digital Agenda chief Neelie Kroes has called on national regulators to drive down the cost of mobile “roaming” nationally and internationally to the cost of terminating landline calls.
Regulators use a variety of accounting formulas to calculate operators costs. Ofcom used a formula call pure LRIC (long run incremental cost). The operators say it should have used LRIC+, which includes “common costs”.
This would raise the operators’ claimed cost base and therefore the ultimate retail price Ofcom allows them to collect.