Overcharging by mobile firms April 30th, 2008

A report by the Competition Commission to be published next month will allege that the big players in the mobile industry keep wholesale charges artificially high, meaning that the cost of calling a mobile is far higher than the cost to the company. It is estimated that collectively O2, Orange, T-Mobile and Vodafone are overcharging to the tune of £1bn per year.

The £1bn, is put forward by BT who is charged a termination rate of 5.1p per minute when it believes a more appropriate cost to be 3.6p per minute. This is assuming that the reduced costs are passed on to customers. However Ofcom defends the charge saying “If the rates were too low the companies wouldn’t be able to recover their costs. The system is entirely fair.”