High Court orders mobile operators to cut costs

Friday, 27 June 2003 12:00 AM

The main mobile phone operators have lost their High Court action against plans to force them to cut their charges to connect to other operators.

Vodafone, T-Mobile and Orange had challenged the Competition Commission's decision to force the mobile phone operators to cut the cost of some of their call charges by up to 50% within three years.

The regulator, the Office of Telecommunications had called on the mobile phone operators to cut the cost of their 'termination charges'. Termination charges are the costs operators charge to connect their customers to rival networks.

However, a year-long Competition Commission was begun after the companies refused to accept Oftel's calls to cut the charges.

The High Court has ruled against the mobile phone operating companies which will mean that the proposed price cuts are to go ahead.
The changes will mean that consumers will save around £190 million a year according to estimates from Oftel. The reduction in charges to consumers would make a call from a BT fixed to a Vodafone mobile fall from 40p per min to 35p per min.

Oftel had proposed capping growth in termination fees to 12 percentage points below inflation, an effective price cut of about 10%, which could lead to savings of £800 million for consumers.

However, the Competition Commission's review called for even larger price cuts after the operators refused to accept Oftel's proposals.

The mobile phone operators claimed in court that the regulators were acting outside its powers laid down in European and UK legislation.

The first of the scheduled price cuts are planned for next month, where 15% would be sliced off the charge to call other mobile networks.

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