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Mobile phone price cuts on the way

Mobile phone price cuts on the way

Industry regulator Ofcom is set to make mobile phone use cheaper for Britons, as it gears up to reduce the amount that networks charge their customers for picking up calls from competing operators.

At the moment there is a charge levied against carriers when their customers call users on rival networks and it is this that is deemed to have caused calling costs to soar beyond acceptable levels.

In 2011 Ofcom will set new rates that are half their current level, falling to a maximum of 2p a minute.

These rates will be fixed until 2015, at which point a further revision will take place.

Ofcom is expected to officially announce its decisions in a report this week and the result should be a £1 billion reduction in the amount of money that operators are charging one another, which will be in turn be passed on to customers.

However, there are fears that the sudden drop in carriers' profits will actually work against the consumer as providers bring up the cost of bills to accommodate the changes in charging.

The biggest losers in this instance could be those using pay-as-you-go phones, which means that Ofcom might be inadvertently penalising those with the lowest incomes.

BT would be a beneficiary of the new ruling, as it currently estimates that connecting landlines to mobile phones sets it back £750 million annually.

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