Ofcom and mobile operators, another battle over termination rates.

ofcom vodafone on london cabs everything everywhere

The UK’s bigger operators (Vodafone and Everything Everywhere) are taking Ofcom to the Competition Appeals Tribunal, arguing for higher termination rates – except Three, which wants the opposite.

Termination rates are the fee paid by the caller’s network to the callee’s network. So if one is with Vodafone and calls a friend on O2 then Vodafone pays O2 4.18 pence per minute to terminate the call.

Ofcom set such high rates in order to prevent dominant telecom companies to shut out the competitors, but mobile terminations are much higher than their fixed-line equivalents. The termination fees by FT, is predicted to be about 10 % of the revenue, so a difference if a penny matters a lot. Right now most of that money comes from fixed-line providers; BT, TalkTalk and so forth. Fixed operators have to pay the mobile termination rate, but only receive the much-lower fixed rate in return so are firmly on the side of reducing the rate as fast as possible.

Ofcom is committed to reducing the mobile termination rate to what it actually costs to transport the call, somewhere around .7 of a penny a minute as Ofcom calculates it.

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