UK regulator plans to reduce customer’s mobile bills by £1 billion

Ofcom, the UK communications regulator plans to order the mobile operators inthe UK to reduce charges for connecting calls from a rival network, a move that will save consumers approximately £1 billion.

Currently a mobile operator charges around 4.7 pence per minute, known as mobile termination rate (MTR) to connect a call from a different network or from a landline.

Campaign groups have been calling to do away with the MTR or at least reduce these charges as consumers end up with high telephone bills.

In a new report, Ofcom is planning to recommend of introducing in 2011 a price cap of 2 pence that mobile and landline companies can charge each other for connecting calls.

The price cap, if introduced, could cost the mobile industry approximately £1 billion upwards, which is a loss mainly to large telecom operators with the most customers, and are likely to oppose this recommendation by Ofcom.

Telecom operators charge each other £2 billion in call termination fees and large operators have been opposing this move earlier also since they argue that they have incurred huge costs in building the infrastructure as well as subsidise or offer free handsets to customers.