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O2: cheap mobile phone deals ‘in jeopardy’

O2: cheap mobile phone deals ‘in jeopardy’

Cheap mobile phone contracts could be a thing of the past if the UK telecommunications regulator moves to reduce the cost of calling between networks, carrier O2 has warned.

Ofcom is currently mulling forcing networks to cut termination rates from 2011 and has received strong backing for the proposals from BT and 3.

However, O2, which is the carrier of the UK’s most popular mobile the iPhone 3G S, has now claimed that such a change would have a deleterious effect on consumers because it would force networks to hike prices for mobiles to recoup the lost revenue.

The company’s submission to Ofcom’s consultation also accuses BT and 3 of being motivated by “self-interest” and says that reforms to termination rates could introduce "a risk that the retail markets would be affected in a way that could harm, and not benefit, consumers”.

Since launching the Terminate the Rate campaign has garnered some 700,000 signatures from the public in support of slashing call costs.

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