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Lower Income Families Lose out
- August 9th, 2009
Mobile telephone users from less well off households could be unable to access the market if the regulator presses ahead with plans to drastically slice the price of calls, the UK’s biggest mobile telephone company O2 has warned.
It was suggested that all of the main mobile telephone networks would increase their prices elsewhere in the value chain, possibly even mobile telephone recycling, in order to recoup the losses they were supporting as an effect of the pressure from the regulators. Smart phone users and those who normally get a free handset every 18 months could see their costs escalate.
Earlier this year the regulator proposed lofty cuts to mobile termination rates – the charge imposed by the networks on each other and fixed-line operators such as BT to connect calls – when the current price cap regime expires in 2011.
BT and the UK’s smallest network 3 have lobbied for them to be scrapped completely with their “terminate the rate” campaign.
A petition started by the two companies has already attained 70,000 signatures, including 200 from MP – all wanting to see the complete scrapping of these fees. The thinking behind this is that it is hoped that this would provoke the introduction of unlimited call bundles which are available in places like the USA for example. In addition, when calling from a landline to a mobile, this cost is likely to fall too.
However in its submission to the regulator as part of the consultation process on its plans, O2 charges the two companies of being “driven ..by self-interest” and warns that “sudden and dramatic changes to termination rates introduce a risk that the retail markets would be affected in a way that could harm, and not benefit, consumers”.
O2 believes that monthly contract charges, handset prices and the cost of calls could all go up. Prepay customers, who tend to receive more calls than they make, will be hard hit as the mobile telephone companies would have to slap “use by” dates on top-up credit. This would be especially painful for low-income households and younger consumers as many rely solely on pre-pay mobile phones and do not have a fixed phone line.
