Mobile phones: Vodafone lifts charges to recoup lost earnings

• Millions pay more to offset Ofcom price cuts
• Pay-as-you-go customers face 5p-a-minute rise

Prices for Vodafone's pay-as-you-go service will rise by a third next month as it becomes the latest operator to try to claw back some of the revenues lost through increased regulation.

The move will heap further pain on consumers who face a winter of financial strain from increased household bills. Food prices have risen more than 13%, according to the government figures; British Gas has raised gas prices by 35% and the water companies have admitted that the average bill will increase faster than inflation. Inflation is running at a 16-year high of 4.4% and is expected to hit 5% in the autumn.

Vodafone, Britain's second-largest mobile phone company, has just under 11 million pay-as-you-go - or pre-pay - customers, who will see the cost of calling increase from 15p a minute to 20p from September. The company is also raising the cost of calling for any of its 7.5 million contract customers who exceed their monthly limits, from 12p a minute to 15p a minute.

It is also increasing the cost of calling 0871 numbers to 35p from 25p a minute while the cost of phoning the 0870 numbers used by many call centres and often chargeable from mobile phones will rise from 15p to 20p a minute.

Vodafone's rises come after rivals O2 and T-Mobile increased their prices back in July. T-Mobile raised its prepaid minimum call charge from 10p to between 15p and 25p, depending on which tariff the customer is on.

Market leader O2, meanwhile, increased its minimum call charge for pay-as-you-go customers who have not upgraded to a new tariff from 10p to 20p. It has 11.5 million pre-pay customers. Its new prices apply to all calls to standard UK landlines and UK mobiles, as well as international numbers and those starting with prefixes such as 0845.

Orange, meanwhile, has kept its prices for callers on its Racoon and older pre-pay tariffs at 15p a minute, while the price of calling on its newer pre-pay tariffs - such as Camel - are 20p a minute.

Contract customers who make calls outside their allowance to a landline or other Orange customer are charged 12p a minute, while calls to other networks cost 35p a minute.

Vodafone said it has not increased its charges for about two years and that only part of the reason for the price rises was "regulation".

Industry observers believe the operators want to push up charges to recoup some money being lost as regulators cap prices.

The cost of making a call while overseas has been hammered by EU telecoms commissioner Viviane Reding, but roaming calls make up a fraction of the operators' revenues. Far more important are so-called mobile termination rates - the charges mobile networks levy on one another and fixed-line operators to call mobiles - which account for about 20% of revenues and have become the focus of intense regulatory scrutiny in recent months.

Last year regulator Ofcom introduced a new set of price caps that slashed prices by between 10% and 45% for Britain's five networks - O2, Orange, T-Mobile, Vodafone and 3 - to between 5.1p and 5.9p a minute.

More recently Reding has suggested rates should come down by 70% to 2p or less.

source: Richard Wray, guardian.co.uk 19-08-2008

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