Mobile phone companies ordered to cut their prices

Orange, O2, T-Mobile and Vodafone, are protesting against Ofcom's proposed cut in cost for users making a call to a mobile phone.

The mobile phone companies argue that a cut in costs would stifle investment, price millions of pay-as-you-go users out of the market, lead to a flood of job losses and end free mobile handsets for contract customers.

The regulator also proposed a 90 per cent drop in termination charges from 2011, the fee users have to pay when terminating a fixed term contract.

Should all of the proposed changes take place, British businesses could save 800 million a year from 2015 onwards.

Orange spoke out in response to these proposals however, "This is a backward step for Britain. If these measures are put in place they will stifle innovation and the way our consumers currently buy, use and enjoy their mobiles may be forced to radically change. Handsets may no longer be subsidised, you may have to pay to receive calls and the rollout of Digital Britain and other network investment may be stalled considerably."

A Vodafone spokesman also spoke out, stating "A cut of this magnitude deters future investment, makes it less likely that the UK will continue to lead in mobile communications and is at odds with the government's vision of a Digital Britain."

Although termination charges may be cut, the result is likely to be an increase in charges in other areas. This could mean that consumers would be charged for receiving calls as is the case for some in the USA at the moment.

However BT and 3 have welcomed Ofcom's move. A spokesman said: "Reductions in mobile termination rates are good for businesses and consumers alike and BT will make sure its customers see the benefit with cheaper calls to mobiles, including fixed price all-you-can-eat packages that take the worry out of calling mobile phones."

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