The cuts will likely please fixed operator BT and small mobile operator 3, who both teamed on a campaign to get the rate either cut or dropped entirely. Smaller mobile operators tend to pay more in mobile termination rates as their users are likely to spend more time communicating with other networks than their own. The UK’s larger operators – Vodafone, O2, Orange and T-Mobile – face losing out on up to £1 billion in revenue according to reports. Ian Scales of Telecom TV demands, “Why not take it to zero?”  But the Guardian is skeptic, “This is only a proposal from Ofcom so there will be an awful lot of lobbying from the four big networks, not least of the potential Conservative government, to reduce the severity of the price cuts.”

This includes higher termination rates (levied for ending calls from a new operator’s subscriber to an incumbent player’s network) and port charges (for accepting traffic from a new player to an existing network).

Incumbent operators such as Bharti Airtel and Vodafone are at an advantageous position because they have a large subscriber base and, therefore, it is necessary for the new players to interconnect. If the new operators do not interconnect with them then their subscribers will not be able to call users on the incumbent player’s network.

“The interconnection charges being imposed by the existing players are based on the telecom regulator’s order issued in 2003. Since then the costs have come down drastically. However, the existing players want to continue with the current charges because it benefits them,” said an executive of a new telecom company.

Read the full story in ‘The Hindu Business Line’ here.