[3GScottishUser]

Ofcom cuts mobile connection charges

LONDON (Reuters) - Media and telecoms regulator Ofcom announced new controls on Tuesday limiting the amount that mobile network operators can charge other telephone companies for connecting calls on their mobile networks.

Ofcom said it expected an average annual reduction in wholesale charges of 400 million to 500 million pounds and that the savings would be passed on to customers.

For the first time, the charge controls will apply to Hutchison Whampoa's 3 unit and other providers of 3G services, as well as 2G network operators who were previously subject to regulation, Ofcom said in a statement.

It said 3 would be subject to charge controls of 5.9 pence per minute, a reduction of 45 percent from existing charges.

The average wholesale charges for Vodafone, O2, Orange and T-Mobile will be cut to 5.1 pence per minute.

For Orange and T-Mobile this represents a reduction of around 20 percent, and for Vodafone and O2 a reduction of around 10 percent, the regulator said.

Ofcom said the reductions from current levels will take place in a number of stages between April 1 and the expiry of the regulations in 2011.

http://uk.reuters.com/article/businessNews/idUKWLB706120070327

[Ben]

[B]Ofcom said the reductions from current levels will take place in a number of stages between April 1 and the expiry of the regulations in 2011.
Four years? Wow, the networks did lobby hard.

[3GScottishUser]

This will undoubtedly hit 3 very hard as a key strategy for them has been the generation of revenues from incoming calls. Most buying a 3 phone probably did'nt know that the cost to call it was often more than double than calls to other networks. 3 have been able to pour huge sums into subsidising handsets and outbound calls making the service look attractive to potetial customers but now they will have to operate on a more level playing field.

It'll be interesting to see how 3 UK make up the loss of 45% of their inbound call revenues. This move by Ofcom will be extremely bad news for HWL who have seen their aquisition rate slowing in the UK in 2006/7. Its going to be a hard task to change the distribution to direct selling, retain existing customers and suffer a 45% reduction in inbound income in a market that is totally saturated and with no unique selling point.

The remainder of 2007 will make for interesting developments I am sure.

[Hands0n]

OFCOM slashed everyone's Termination Charges - not just 3's.

I await the MNO's response to that and Viviane Reding's next assault on their rip-off pricing tactics. Transparency? They've a very very long way to go indeed!

[3GScottishUser]

Indeed all termination charges were reduced but there is a vast difference between the drop of 45% 3 will have to endure and the 20% Orange/T-Mobile will suffer and the 10% Vodafone and 02 loose.

It'll matter more to 3 too as they are the least well established player with the fewest paying customers shouldering the cost of full UK network coverage.

I have a feeling that this decison could be a defining one for HWL's future 3 UK plans and there will be some serious pencil sharpening in Hong Kong as we speak!