Secret Tax on Phone Calls
A SECRET stealth tax is being slapped on every call to a mobile phone, it was revealed last night.
Operators are charging up to five pence a minute to phone a mobile, even if the call is made from a landline.
But it costs the companies less than one penny to connect the calls, meaning they are raking in £2.5billion a year from the fees known as mobile termination rates.
Few consumers are aware of the charges, which make up 80 per cent of the cost of phoning a mobile phone from a landline. Customers are also charged more for calls from their mobile if they are phoning somebody on a different network.
John Petter, managing director of consumer BT retail, said: “People are not aware of this issue, so it is not unreasonable to call it a stealth tax.
“It is very unfair and particularly cruel on people who do not have a mobile phone, such as some elderly people.
“These people are subsiding the profits of the mobile phone companies, even though they are not even their customers.
It is very unfair and particularly cruel on people who do not have a mobile phone, such as some elderly people
“It has also proved extremely tough for small businesses who often have to call their customers on mobile numbers.”
Mr Petter blasted the charges as “extremely outdated” and said they had been introduced when mobile phone companies had first been set up. “The fees date back to when these firms were building up their networks to help them cover their start-up costs. But now they are multi-national, multi-billion pound firms, not cash-strapped businesses and they should be giving customers a fairer deal.”
Yesterday, BT joined forces with UK mobile phone operator 3 to launch the Terminate the Rate campaign, which calls for the MTRs to be scrapped.
They said that phone tariffs should be fixed at £35 a month, for unlimited calls and texts to both landlines and all mobiles.
Telecoms watchdog Ofcom yesterday promised to review the charges.
If the proposals are successful, it could pave the way for mobile and landline bills to be slashed.
BT and 3 said this would save individual customers and businesses hundreds of millions of pounds.
Mr Petter said that phoning a mobile phone was still “too expensive”.
“Mobile termination rates might sound like the obscure pre-occupations of telecom nerds or geeks but their effect is to impose an unfair tax on every household and business and organisation in the UK,” he said.
“They fatten the profits of the big four mobile players at the expense of real competition and innovation.”
Kevin Russell of 3 said: “The cost of terminating a call on a mobile network is less than a penny. The current regime allows all mobile operator to charge much more. If we terminate the unfair rate, everyone will save money.”
He added that if the rates were scrapped, 3 would be able to offer a flat-rate, all-inclusive package.
The Federation of Small Businesses yesterday also lent its support to ending MTRs. Chief spokesperson Stephen Alambritis said it would be “good for business, good for consumers and good for the economy”.
The Terminate the Rate campaign was launched just hours after Ofcom announced that it was considering “radical alternatives” to charges.
The watchdog has set out six options for the future of MTR charges, which range from maintaining the current system in which rates are reduced annually, to removing all the termination charges.
Ofcom chief executive Ed Richards said: “The role of termination rates in mobile services has attracted enormous controversy. We are determined to examine them from first principles. This consultation gives consumers and industry an opportunity to debate the fundamental questions.”
Earlier this month, the European Commission issued guidance which said that the rates should be based only on the real costs which operators incurred to connect a caller.
If this guidance is adopted, it could save consumers – using their mobile phones in Europe – billions of pounds. The Terminate the Rate campaign was also welcomed by phone users. Single mother of two Leigh Odimah, 41, from north London, pays for her mobile bill and that of her daughter Cree, who is 17.
The part-time freelance consultant in fashion marketing said: “Cree started using the landline when her credit ran out. She ran up huge bills calling mobiles. My phone bill went up from £60 to £190 a month.”
HR manager Claire Thompson, 31, from Surbiton, south-west London, said that the MTRs meant that her retired grandparents could not afford to call her on her mobile.
“They won’t contact me on my mobile as they are worried about getting a huge bill. I had a landline installed so they can call me on that.”
