When fixed and mobile operators offer their customers the ability to call UK mobile numbers, they pay mobile operators a wholesale charge to complete those calls.
The rates that operators pay are known as “mobile call termination” (MCT) charges.
On 31 March 2011, the current rules which set wholesale MCT charges will expire. In our Mobile Sector Assessment (MSA I) we asked what rules, if any, should apply after that time. This consultation initiates a market review to consider that question in more detail.
This consultation focuses primarily on how changes in mobile markets might impact regulation of MCT after March 2011(which is one reason why this market review is closely related to our MSA consultations, the second of which will be published shortly). The mobile sector is changing rapidly; for an increasing number of users, mobile services are used to access the internet and send messages as much as to make telephone calls. These changes may affect the question of what MCT charges are likely to lead to the best outcomes for consumers, and whether regulation is needed to achieve this.
Responding to a changing market, European regulators have been debating the merits of different approaches to regulating MCT charges. The European Commission (EC) has issued a Recommendation, which sets out its views about how national regulators, including Ofcom, should approach these questions. We assess the approach set out by the EC in its Recommendation in section 6. At this stage however, we think it worthwhile to consider the merits of alternative approaches (in terms of the impact on consumers), also, as part of the wider policy debate.
The focus of this preliminary consultation is on whether to regulate prices and, if so, how. It does not, at this stage, consider what the regulated prices might be, or attempt to decide the best approach.
When we published our Review of Wholesale Mobile Voice Call Termination in May this year, we suggested that we aimed to publish a further consultation by the end of 2009. This was to address the method we proposed to adopt in setting rates, which would be followed by a further consultation in Q2 2010 to discuss any remedies that prove necessary, subject to the analysis in that market review.
A number of stakeholders have urged us to take a decision as early as we reasonably can, subject of course to the need for rigorous analysis and due process. We agree that it is in consumers interests that we do all we can to make the market review process as quick and straightforward as possible.
In light of this, we now intend to publish a single consultation, building on the responses to our preliminary consultation, covering both the question of whether remedies are appropriate, and what remedies (if any) we propose, including (if appropriate) any charge controls. We aim to publish this further consultation in Q1 2010. This should remove the need for the second consultation altogether, potentially shortening the overall time to finish the market review.
This timetable remains challenging, and should be regarded as provisional a number of aspects of the analysis (including gathering information and responses to our consultations) could adversely affect it.
As part of the on-going market review we continue to engage with all stakeholders. If you have any questions on any aspect of the consultation process please contact the project manager, Paul Jacobus on paul.jacobus@ofcom.org.uk