Calls to mobiles are about to get cheaper

The latest Ofcom announcement brings good news for all those who make telephone calls to mobiles. Ofcom has imposed a reduction in the rates charged by mobile operators to other telephone companies in return for allowing calls to be connected to the mobile network. This charge, or termination rate as it is known, forms a part of the overall cost to consumers of making telephone calls.

In 2007, Ofcom proposed that termination rates should fall over a four year period ending in 2011. This initiative has resulted in rates reducing by 35% in real terms. Now Ofcom wants to see a further reduction of 80% over the next four years.

Whilst this further reduction in termination rates seems on the face of it ambitious, Ofcom has taken into account the change in the mobile market over the last four years. With four large mobile operators now in the market alongside a host of smaller companies and those offering VoIP calls the choice available to consumers has broadened considerably.

In addition to this range of choice how mobiles are used has also changed dramatically over the last four years. Data, rather than voice, accounts for the majority of mobile traffic and this trend is predicted to continue. In fact data traffic via mobiles increased by 104% in the last year. With termination rates only applying to voice calls the impact on mobile operator’s accounts will diminish proportionately as data continues to increase in volume.

The Ofcom decision is also partly driven by EU rulings. In May 2009 the EU published a recommendation that termination rates in 2012 should be no more than 3 cents. The new Ofcom rates for the four largest mobile providers are being set at 2.66p per minute for 2012, with those rates falling to 0.69 pence per minute in 2014/15. Whilst these rates are not applicable for smaller providers Ofcom expects them to be proportionate.

This initiative by Ofcom should see all telephone charges for calls to mobiles falling over the next four years. This will benefit consumers across the board whilst leading to greater competition in the mobile market. Even those telephone users on VoIP and other fixed VoIP packages may see a change in charges by the end of the four year period.