Mobile operators "overcharging by £1bn"

Mobile phone operators are overcharging consumers "to the tune of £1bn" on inflated termination charges, a senior BT executive has said. John Petter, the new head of BT's consumer business, made the comments in The Guardian on Monday, bringing BT into an ongoing debate over mobile termination charges that has spread to involve UK and EU regulatory authorities.

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Mobile and fixed telecommunications companies charge set rates to allow third parties to connect to their networks, but European mobile phone companies charge far more than fixed telecoms companies or US mobile networks. This charging structure was part of what allowed the mobile industry to get off the ground more quickly than in the US, but some - such as 3G operator 3 UK - have argued it is now time to cut or discard the fees.

BT's Petter said the UK regulator, Ofcom, should "take a stand" and force the reduction of the fees, according to the Guardian report. "The mobile companies are setting the termination prices well in excess of their costs. Customers are being overcharged to the tune of £1bn," he said, according to the report.

The UK's Competition Appeal Tribunal met on Monday to consider a case brought before Ofcom by 3. The tribunal is considering various questions related to termination charges, including whether mobile networks should scrap the fees. Such a move would allow mobile phone users access to unlimited calling packages of the sort that are common in the US or on fixed-line networks. 3 is newer than the other UK operators, has fewer users, and thus pays out about £50m more per year in termination rates than it collects from the likes of Vodafone, O2, Orange and T-Mobile, according to the company.

BT, whose termination rates are far lower than those of mobile companies at about 0.4p a minute, has said it pays more than £1bn a year in mobile termination fees. Ofcom proposed a new schedule of mobile termination rates last year, under which they will fall gradually over the next three years, but BT and 3 argue the regulator should be far more strict. (Matthew Broersma)

(jbe)