Customers could suffer in long run

OFCOM likes to present itself as a customer champion. Yesterday, it said its decision to slash mobile termination rates (MTRs) would “benefit consumers”. But despite the quango’s well-meant intentions, many consumers will soon be worse off as a result of these changes.

That’s because MTRs – the wholesale charges made by mobile operators on those who piggyback on their network – disproportionately hit landline customers. Mobile customers will also benefit to a certain degree – especially if their friends and family are on other networks – although any gain is likely to be outweighed by costs elsewhere, as mobile operators operators hike other charges to protect their revenues.

Currently, the UK still makes more landline calls than mobile ones, but only just: 53 per cent of calls were made on a landline in the second-quarter of 2010, the most recently available figures. So Ofcom can claim to be on the side of the majority.

However, as everyone knows, consumers are increasingly using their mobile phone as the primary means of making voice calls. According to Ofcom’s own statistics, mobiles will account for a higher volume of voice calls than landlines by the first quarter of 2012, if not sooner.

Meanwhile, Pay as You Go mobile users – who make very few calls but earn revenues for the operator by receiving them – will get less good deals. These are normally children, who are given “safety” mobiles by their parents, and the less well-off. That will be compounded by the increasingly long contracts that customers are being forced into, as network operators seek to claw back the costs of ever more sophisticated contracts. Maybe Ofcom should have left well alone.