Oftel fuels row over mobile charges

The row between telcos, mobile operators and Oftel over proposals to cut mobile call charges escalated yesterday, when the watchdog referred the situation to the Competition Commission.

Oftel said it would refer the price cut proposals after it failed to reach a compromise with the four main mobile operators: Deutsche Telekom's One 2 One, Vodafone, mmO2's BT Cellnet and Orange.

Following its recent review of the market, Oftel proposed to protect consumers by capping the amount the mobile operators can charge for receiving calls onto their networks.

The proposed caps are set to prevent consumers from paying too much for calling a mobile phone, as well as allowing operators to make a fair return and be more efficient.

David Edmonds, director general of Oftel, said: "Because the caller has no choice over which network is being called and the price they have to pay for the call, there is no incentive for the mobile operators to reduce their charges for carrying calls onto their networks.

"I regret that the operators have rejected the measures, as our proposals are proportionate and fair for consumers and the industry alike."

The row kicked off at the end of last month after Cable & Wireless, Colt Telecom, Energis, Kingston Communications, Thus and WorldCom sent a jointly penned complaint to Oftel.

The letter said: "Oftel has not gone far enough in capping the inflated mobile termination rates they are forced to pay to the four large UK mobile network operators.

"These excessive charges, which are not subject to competitive pressure, as Oftel has recognised, adversely affect both consumers and operators that pay for mobile termination, and produce inefficiency and distortion in network investment in the UK."

Oftel said in September that the price of calls to mobiles would fall by 12 per cent over four years, saving users £800m. But while the telcos said this was not enough, the four main operators have objected strongly to the cuts.

The regulator will make its official referral to the Competition Commission in the New Year. The Commission has six months to reach a decision, which can be extended for a further six months.