Cheaper mobile calls on the way after ComReg decision

13 Oct 2005

The Commission for Communications Regulation (ComReg) has said that consumers should see a reduction in their mobile call costs following its imposition of new obligations on mobile operators for termination charges.

These termination charges are the wholesale rates that fixed and mobile operators pay to mobile operators for calls that are connected to their networks. According to the telecoms regulator, there is a knock-on effect to consumers as these rates are factored into the prices that business and consumer customers pay for their calls between fixed lines and mobiles or from mobile to mobile. The direction applies across the board for prepay and postpaid customers.

The three operators affected by the decision are Vodafone, O2 and Meteor, all of whom were previously designated as having significant market power. In future, they are to be compelled to charge prices for mobile termination that reflect the cost of providing this termination service. As part of their obligations, the operators will have to supply ComReg with information justifying these costs.

This development is consistent with moves elsewhere in Europe to a model known as cost orientation. In Ireland, it is understood that this will be applied on a glide slope, whereby the rates do not apply to all operators equally at once.

ComReg’s direction to the operators includes an unspecified transition period during which the termination prices will be moved towards a cost basis. Vodafone and O2, as the more established players in the Irish market, are expected to arrive at this cost-orientation point faster than Meteor, which is the most recent market entrant to which the direction applies.

Andrew Kelly, director of regulatory and corporate affairs at Meteor, told “This is a sensible and structured approach to the mobile termination rate issue. It takes into account the different stages of development of all the networks and the fact that they don’t all have the same cost-oriented rate.”

He said that if Meteor had been obliged to reduce rates at the same speed as Vodafone and O2 it would have effectively gone further because its cost structure is different. As such, the company would have been unable to stay competitive.

By Gordon Smith