Ofcom: mobile termination rate for all telecoms to cut

Ericsson mobile phone userUK regulator Ofcom announced its plan to review mobile termination rate for all telecom operators in the country.

Ofcom said its latest measures indicate that the current cap of c.0.5p per minute would drop by around a tenth in real terms by April 2021.

This means that telecom operators will be able to offer more cost effective phone call services to its customers in UK. Recently, some of the telecom operators increased the price of voice calls across the country.

Ofcom earlier proposed a charge control on MTRs: a maximum cap, based on the estimated cost of connecting a call. This would apply to all mobile operators connecting calls in the UK from 1 April 2018.

“The proposals are designed to promote competition and protect consumers from high prices. Our proposed charge control would mean that the current cap of c.0.5p per minute would fall by around a tenth in real terms by April 2021,” said Ofcom.

Ofcom said the consultation will close on 5 September 2017. Ofcom plans to publish a statement by March 2018.
Mobile call termination marketOfcom indicates that a likely increase in UK MTRs, owing to differential regulation, will result into a reduction in calls to UK consumers from outside the EEA.

UK has EE, H3G, Telefonica and Vodafone with telecom operations in both the wholesale and retail markets.

MTRs have decreased to around 0.5ppm today from more than 13 pence per minute (ppm) in 1998 for terminating a minute of a voice call on a mobile network.
Average MTR in the UKOfcom said MTR reductions combined with reductions in call volumes from fixed-to-mobile networks make the MCT market worth less than at the time of previous reviews.

£345 million was the total revenues from mobile wholesale termination in the UK in 2016-17. This reduces to around £85 million if we exclude mobile-tomobile calls (include only “net” termination).

Based on the UK retail mobile revenue of £15.2 billion in 2015, net termination now accounts for a small proportion of mobile providers’ total revenues (net termination represents around 0.5 percent of UK retail mobile revenues).

Ofcom said it does not foresee any significant network investments or the deployment of a new generation of mobile technology such as 5G would have a significant impact on the MCT market in the next three to four years.

The average MTR in Europe stands at 1.27 eurocents per minute, and the subscriber weighted average is estimated at 1.08 eurocents per minute according to the latest European benchmark.

The average MTR in Europe has declined significantly in the last 10 years from about 11.5 eurocents per minute to less than 1.3 eurocents per minute.