BT accuses O2 of ’scaremongering’ at warnings, the UK’s mobile phone company and formerly part of the telecommunications giant, that BT’s intended cuts to the cost of calling a mobile phone could price some mobile users from low-income households out of the market.

Ofcom, is to look at the issue of mobile termination rates – which is the charge levied by mobile networks on each other and fixed-line operators to connect calls. O2 has warned that as a consequence the mobile phone companies would have to raise prices and potentially introduce “use by” dates on top-up credit.

O2 claim this would be particularly painful for low-income households and younger consumers as they are solely reliant on pre-pay mobile phones and many do not have a BT line.

It has been claimed that we have been here before in 2002, when Offcom first proposed controls of termination rates O2 made similar claims which have been proved unfounded with the benefit of hindsight, with the usage of prepaid phones actually rising since that point.

BT and the UK’s newest mobile phone network 3 have joined forces to call for a scrapping of mobile termination rates through their “terminate the rate” campaign. More than 70,000 people have already signed their petition and 198 MPs have expressed their support for an early day motion calling for termination rates to be axed.

“They know that excessive mobile termination rates are unfair, distort competition and prevent fixed phone companies from offering low-priced calls to mobiles,” John Petter of BT has said. “It’s no wonder that O2 and the other mobile operators want to hang on to the current regime and are resisting change. But the sky won’t fall.”

O2 questions whether a reduction in mobile termination rates would actually bring the desired drop in call charges from fixed-line phones. They have stated “In 2007, when mobile termination charges fell significantly, both BT’s and Virgin Media’s [cable] average retail prices actually rose. Mobile termination charges fell again, significantly, from April 2009, but this has had no effect on BT’s and Virgin Media’s standard retail charges; they remain stubbornly high. If there is a problem in fixed retail markets, it is not one that lower mobile termination rates would solve.

BT Phonesand Cordless phones can be found from most good phone retailers

Technorati Tags: BT, Business, communication, consumers, Other - Business & Finance, phones, politics, retail, telecoms