Landline to mobile call fees cut ordered by regulator

The UK Competition Commission has said that cuts proposed to the cost of calling mobile phones from landlines should happen more quickly, but Vodafone claims that the move will harm pay-as-you-go consumers.

Media regulator Ofcom ruled last year that the fees charged by mobile operators for calls on their networks should drop by 80% over the next four years.

The rates have already been reduced in many cases, but the process has also been dogged by legal appeals.

Vodafone, the UK's largest mobile operator, warned that the cuts would result in higher charges for customers, particularly pay-as-you-go mobile users.

Ofcom wants to see a reduction in the fees mobile phone firms charge rival firms for handling calls on their networks, also known as mobile termination rates (MTRs)

The watchdog said that the charge should come down from an average of 4.18p to 2.66p. It wants MTRs to drop to just 0.69p by 2015 in the hope that the reduced fees would result in cheaper services for consumers.

Vodafone, Everything Everywhere and O2, feel that the rate cut is too extreme, as they stand to lose around £800m a year in revenue. But BT has backed the move, teaming up with mobile firm Three to launch a Terminate the Rate campaign.

Today, the Competition Commission sided by with the campaign, saying that the first-stage MTR reductions should be implemented by 2014.

However, a spokesman for the commission told BBC News: "Our suggestion is that prices fall a bit faster but there is a strong likelihood that the mobile firms will launch another appeal so this is not done and dusted yet,"

In a strongly worded statement, Vodafone warned that the expected loss of revenue would have to be passed on to customers.

"We are very disappointed that the Competition Commission considers that deep cuts in MTRs are necessary because it will further harm consumers," the firm said.

"We warned Ofcom at the time of its original decision that drastic cuts in termination rates would disenfranchise many consumers who rely on their phones to keep in touch with friends and family... making it unsustainable for the mobile phone companies to continue subsidising the high cost of mobile handsets for pay-as-you-go users."

Vodafone added: "It is particularly galling to see the commission's position given that many of the fixed-line operators have merely pocketed previous reductions in mobile termination rates, instead of reducing prices for customers.

"BT, meanwhile, has actually increased its line rental prices three times over the past year and a half."

> Broadband and landline switching problems to be tackled by Ofcom