Mobile operators charge each other and fixed networks for terminating calls onto their mobile networks, and these charges are passed directly to the consumer making the call.
Oftel believes that the charges are too high. In 2001, the telecoms regulator issued proposals for cost reductions. The mobile phone companies, however, rejected these proposals and referred the case to the Competition Commission.
According to Oftel, Vodafone, O2, Orange and T-Mobile are currently overcharging customers by up to 40% for calls to rival networks. Oftel said: "callers to mobile phones have no choice but to pay the termination charge set by the mobile operator, which means that there is little incentive for the operators to reduce their charges towards their actual cost."
Therefore, Oftel decided, there will be a one-off 15% cut in connect call charges by July 2003. This will be followed by three further annual price reductions of up to 15%, depending on inflation rates.
Although Oftel claims that the new rules will not jeopardise the operators' profits, the mobile phone firms have already expressed their opposition to the new price plan.
Vodafone claimed that the Competition Commission's report is "flawed", and said it plans to seek a judicial review of Oftel's decision. The company also claimed that the price cuts are against the interests of consumers, which will end up paying more for buying and using mobile phones.
Part of the Competition Commission's report is available here