[3GScottishUser]

Hutchison 3G UK has filed an appeal against a regulatory decision to reduce its termination charges by 45 percent, calling the ruling "absurd" and "'anti-competitive," the Financial Times has reported. The company has lodged the appeal with the UK's Competition Appeal Tribunal.

In an interview, 3 UK chief executive Kevin Russell told the newspaper that the decision by the regulator, Ofcom would effectively result in subsidies to the incumbent operators.

Russell said 3 UK is a already a "net outpayer" to the other operators in terms of interconnection charges, which would be logical considering the operator's smaller market share. He estimates that termination charges payments would double to around £100 (US$190) million this year if Ofcom's ruling is upheld.

'What you end up with is this illogical and absurd situation where you have a new entrant... actually cross-subsidizing significant amounts of money to incumbents,' he said. Those incumbents used the money to increase their competitiveness in the marketplace, to 3's disadvantage, he added.

Hutchison 3G UK is estimated to have ended Q1 2006 with just over 3 million customers - representing a market share of about 4.5% according to figures from The Mobile World subscriber database.

http://www.cellular-news.com/story/24014.php

[3GScottishUser]

Reading recent reports it's unlikely Kevin Russell will have much success with this appeal as Ofcom's differential termination charge cap is already in the process of being challenged by the EU competition authorities who claim that 3G termination charges should be totally equal and should not be used to offset the massive licence fees paid by operators.

I have alwys thought it's ridiculous that one operator could charge another more for the same termination service. The size of the operator has nothing to do with it!!

I have no sympathy with Hutchison on this issue. They bought a licence like the rest and their rollout and costs have been broadly similar. It's their own fault they had to start from scratch in the UK having cashed in their Orange investment.

I suppose 3 have to explore every avenue but I am concerned that if this issue is brought to prominance the EU may step in and force Ofcom to reduce and level termination charges across the board.

[bsrjl1]

OK you get a 3 contract & 0870 numbers are included, or TM with 07744. You then find out that they're changing the prices, so you kick up a fuss.

3 will have a business plan (well it must make sense to someone!) that they will get so many customers, receive so much incoming calls into the network & the sums all work out. If that amount is reduced more than they expect, they're going to suffer.

It's not like all the 3G licences were pitched at the same prices, A was specifically for a new entrant with all the nice extras to entice someone new into the market. Now they're going to remove one of the major benefits.

[3GScottishUser]

There was no benefit implied for any of the 3G licences. The only benefit of the A licence was some additional paired bandwidth.

The disproportionate termination charges are something that operators invented as they were outwith the scope of the Oftel/Ofcom GSM price controls.

It suited Hutchison to make incoming callers pay a premuim to subsidise their acquisition efforts. They claimed they needed this additional income to break into the market but in reality it was unsuspecting landline customers who were paying the price to call 3 UK's customers. Vodafone also jumped on the bandwagon with disproportionate 3G termination pricing. Who could blame Vodafone, what is good for one is fine for all... but the reality is what the EU have stated that raised 3G termination rates are simply a means to recoup the high licence fees paid and a backdoor to fleese customers.

The whole 3G premium termination rate differential is nonsense and Ofcom's proposals are the very least that could be expected to protect customers from disguised pricing that pays off the cost of commercial companies auction gambles. Much better if the networks innovate to recoup .... people will pay for what they value ... rather than pay through the backdoor with 3 times the cost to call 3G phones (and most dont know the differentials) when calling from landlines.