Ofcom cap on mobile termination rates

Posted: 8th March 2013

iphone A mobile phone company that objected to a change in the method employed by the Office of Communications (Ofcom) to control mobile termination rates (MTRs) – resulting in its revenue from that source being more than halved – has had its complaints of unfairness and inconsistency dismissed by the Court of Appeal.

The change in Ofcom’s method followed a market review and extensive consultation aimed at conferring the greatest possible benefit on mobile phone end-users. It was predicted that the pushing down of MTRs would result in mobile phone companies suffering a £200 million reduction in revenue which would in turn mean retail subscribers being required to pay more for communication services.

The price control method was preferred by Ofcom as a better approximation of marginal costs, as well as falling into line with recommendations made by the European Commission, and was subsequently confirmed by the Competition Commissioner and the Competition Appeal Tribunal (CAT).

Everything Everywhere Limited (EE) challenged the CAT’s decision at the Court of Appeal. It argued that errors in Ofcom’s approach identified by CAT should have resulted in the issue being remitted for redetermination by Ofcom but the court rejected EE’s plea that the CAT’s decision was infected by procedural unfairness and inconsistency and the company’s appeal was dismissed.