Landline to mobile phone call charges to fall by 85% - The Guardian

The wholesale price of calling a mobile from a landline is to drop by 85%, regulators have confirmed, slashing an estimated £800m from Britain's phone bills.

After years of legal wrangling between telecoms companies and regulators, the Competition Appeals Tribunal (Cat) has confirmed that by April 2015, the cost per minute will fall from 4.18p to 0.65p.

However, Vodafone has warned that the savings, which have been pushed through in increments since April last year, are not being passed on to consumers. It says fixed line companies like BT Group and Virgin Media are raising prices at a time when their own costs are falling.

In a statement, Vodafone said: "The fixed-line operators have merely pocketed previous reductions in mobile termination rates, instead of reducing prices for customers. BT, meanwhile, has actually increased its line rental prices three times over the past year and a half."

When telecoms watchdog Ofcom first ordered the price cuts, both the mobile and fixed line companies complained, with Vodafone, Everything Everywhere and O2 arguing they were draconian, while Three and BT said they did not go far enough.

The ruling by the Competition Appeals Tribunal opted for even lower prices than Ofcom, saying the final cost should fall over a four year period not to 0.69p as originally proposed but to 0.65p. The reductions will also come at a faster rate over the first three years than Ofcom had suggested.

But BT put its call charges up twice last year, TalkTalk increased line rental by 9.5% in September, and Virgin Media is raising call charges in April.

A spokesman for BT said it had cut the cost of calling mobile phones from landlines last May by 24% in the evenings and by 13% during the day.

Ofcom welcomed the tribunal's ruling, saying its decision would "reduce significantly termination rates which will bring competition and consumer benefits".

Mobile networks argue the poorest consumers are losing out as a result of the cuts. They are compensating for lost revenues by penalising their less well off customers, withdrawing subsidies for pay-as-you-go handsets.

Vodafone stopped subsidies in July 2011, and in January Carphone Warehouse, the largest mobile retailer, said there had been a "significant decline" in pay-as-you-go sales in recent months.

• This article was amended on Wednesday 15 February 2012 to make clear that wholesale rather than retail call costs are set to fall by 85%.