UK: BT calls for the end to interconnection charges for telephony it considered unfair and outdated

[pa] Scrapping the charges that telecoms operators make to connect calls to each other's networks could pave the way for an all-inclusive fixed monthly price for mobile phones, BT and 3 have said.

The two operators said the move would lead to cheaper phone calls and a better deal for consumers just hours after telecoms watchdog Ofcom announced a consultation on the future of the charges, known as mobile termination rates.

BT said the current system cost the British economy £750 million per year and was "profoundly unfair and extremely outdated" while mobile firm 3 said it could offer unlimited calls, texts and internet use for a maximum of £35 per month if the charges were scrapped.

John Petter, MD Consumer of BT Retail, said: "Our customers are telling us very, very clearly that they want unlimited flat-rate unmetered tariffs that will give them the transparency, confidence and security so they can manage their household finances.

"Mobile termination rates might sound like the obscure preoccupations of telecom nerds or geeks but their effect is to impose an unfair tax on every household and business and organisation in the UK.

"They fatten the profits of the big four mobile players at the expense of real competition and innovation, and they perpetuate a system of billing that promotes confusion and anxiety." He said mobile phone operators charged BT 4.7p per minute for every call from a BT landline to a mobile phone, despite the underlying cost being less than 1p per minute.

He added that the mobile firms paid BT about 0.3p per minute for every call from a mobile to a BT landline.

Mr Petter was speaking at the launch of the Terminate the Rate campaign at BT Tower in central London.

Earlier, Ofcom said it was considering "radical alternatives" to the current agreement, which expires in 2011, in a bid to give mobile operators more flexibility to design competitive call packages and pass these benefits, including any reduced prices, on to consumers.

Higher mobile termination rates make it harder for fixed and small mobile operators to compete with large mobile operators.

Bid to axe network connection fees