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Phones

New Ofcom rules to slash mobile charges

Ofcom says calls to mobiles from landlines and between networks will cost much less with a huge cut in termination rates, and a promise of one-day switching

Come on down -- Ofcom is slashing prices! The regulator has decided to cut termination rates, the wholesale charges phone operators make to connect calls to each others' networks. Under Ofcom's plans, rates will fall from around 4.3p per minute today, to 0.5p per minute by 2015.

Ofcom says the cut will lead to cheaper calls from landlines and more competition in a market where voice traffic is being eclipsed by data, thanks to bandwidth-hungry smart phones and VoIP. The existing rules on termination fees expire in March 2011, so new rules are required.

The cut should benefit smaller operators, such as 3 -- they tend to pay more in termination fees because their users are likely to make more calls to other networks. 3 had already been given a lower termination rate than its competitors in a bid to help it grow.

It's not clear how much of the cut will be passed on to us lucky consumers, though. Small networks could try to keep some of the savings to themselves, while bigger networks increase fees for things such as text messages to make up for the lost revenue.

Kevin Russell, CEO of 3, told the BBC it will be passing the full price cut to its customers and reap the rewards of a bigger cut in the market.

Ofcom also said we should be able to switch networks within one day while keeping our mobile numbers. The current system of getting a PAC code to switch can take days and be a right faff.