BT Cellnet cross-subsidy claim withdrawn

UK telecoms watchdog Oftel has withdrawn its claim that BT Cellnet is unfairly cross-subsidising its mobile phone service providers.

Oftel issued a draft order against BT Cellnet in July this year, accusing the operator of using its network business to subsidise its mobile subsidiaries, such as Martin Dawes.

But almost five months after the draft order was issued, and over a year since it began an investigation, the watchdog has finally announced that it will not be taking any further action after revised figures proved the mobile operator is not cross-subsidising its service providers.

Oftel, which developed a formula to assess whether operators are cross-subsidising unfairly, claims it received further data from BT Cellnet since the draft order was issued which lead it to change its initial findings.

David Edmonds, director general at the regulator, said: "Independent service providers must be able to compete fairly with those service providers owned by a particular operator. Further information from BT Cellnet shows that it is not unfairly cross-subsidising its own service providers."

BT said Oftel's decision vindicated its position. "The mobile market is fiercely competitive and should no longer be subject to intrusive regulatory intervention," it said. "The Oftel Formula, which formed the basis of Oftel's decision to issue the draft direction, was conceived more than seven years ago. The mobile telecoms market has changed beyond recognition over that time. The Formula is no longer relevant and should be removed."

Oftel said it will continue "at least for the time being" to monitor cross-subsidising with its formula, but admitted that the investigation had taken "substantially longer" than it should have done. It launched an initial investigation in July 1999.