Will the Ofcom mobile ruling save you money?

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By Luke Jovetic
Know Your Money Editor

Telecommunications regulator Ofcom has announced new proposals it claims will lower the connection fee for customers who wish to call a mobile phone using their home landlines.

At present people who call someone on a different network are charged a mobile termination rate of around 4.3p for every minute of the call, which is added to the bill.

What are the changes?

The new changes introduced by the consumer watchdog mean that the current charges must be reduced. This means that UK mobile providers will begin to cut the rate they charge from next year and it has to fall to 0.5p a minute by 2015.

It believes these proposals will also mean that both landline and mobile operators are given greater flexibility in designing competitive call packages, which will increase the level of competition and be of benefit to consumers.

Around 32.7million UK homes and businesses will benefit from this ruling.

Other changes may also be on the way as Ofcom is acting on more than just the mobile termination rate. Following discussions, it plans to rule that consumers should be able to transfer their existing mobile phone number in just one working day instead of two.

The watchdog wants to rule that mobile companies should provide the porting authorisation code (PAC) - which is needed to switch - within two hours of a customer requesting it.

Mike Wilson, mobiles manager at moneysupermarket.com, said: "Number porting is essential for people to be able to swap mobile providers and get a better deal.

"Setting a one day time frame for mobile operators to transfer your existing phone number and setting a two hour maximum to give a PAC code - which enables the customer to swap - is good news for mobile users and gives people greater power."

Is it good news?

The ruling seems to be a positive move to slash the cost of keeping in touch via the phone, although it has received a mixed response.

A spokesperson for Ofcom said: "As rates fall and operators adapt, consumers will benefit from cheaper calls and competition in both the UK fixed telecoms and mobile markets."

BT was also quick to ensure that customers will see the benefit of cheaper calls to mobile phones. A spokesman said this will include fixed price all-you-can-eat packages that take the worry out of calling mobile phones.

Not everyone believes the new ruling will prove to be beneficial to consumers or phone operators.

Conrad Longmore, editor of Mobile Gazette, said: "Operators will simply look to recoup money from other means, such as cutting handset subsidies, locking customers into longer contracts or by reducing call and data allowances elsewhere.

"Operators will no doubt claim that this will damage innovation, but in reality it probably won't make much difference."

He added that Ofcom's approach to regulation is unlikely to be of benefit to consumers or operators in the long term.

Either Ofcom need to fully review all charges levied by mobile operators for maximum fairness, or perhaps they should just leave market forces to do their work, he suggested.

An option to consider?

One current offer that regular phone users may wish to look at is provided by Virgin Media as it is the first phone provider in the UK to offer new and existing customers free home phone to mobile calls.

Customers may be able to achieve better value thanks to the deal which means that Virgin Phone customers will be able to call Virgin Mobile customers free of charge.

It believes this demonstrates "unbeatable value" and will offer frequent callers the chance to save large sums of money on call charges to mobiles every year.

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