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Monday, 7 January, 2002, 16:45 GMT
Oftel squares up to mobile firms
Children using mobile phones
Oftel: Measures needed to "protect consumers"
Telecoms regulator Oftel has set the scene for a bitter conflict with mobile phone firms by asking trade watchdogs to probe "excessive" bills.

Oftel chief David Edmonds has formally asked the Competition Commission to open an investigation into the so-called "termination fees" the UK's top four mobile phone operators charge for using each other's networks.

Mr Edmonds' investigation warning last month prompted an angry response from operators including Orange, which warned that the regulator had "got it wrong".

"Orange will fight," the company said.

But Oftel, restating that charges were "too high", on Monday confirmed it had ordered the probe, which could take up to a year to report.

"Because the operators have rejected Oftel's proposals to reduce these charges, Oftel has asked the Competition Commission to carry out its own investigation," a statement said.

Consumer protection

Oftel said in its December warning that while a peak rate national call over British Telecom landlines cost 24p, the same call over a mobile phone cost 60p, of which the termination fee accounted for 39p.

Oftel proposed capping growth in termination fees at 12 percentage points below inflation - effectively imposing an annual price cut of almost 10% in the current economic climate.

"I am confident that charge controls are an appropriate measure to protect consumers," Mr Edmonds said.

The move would save consumers 800m, a report said.

Vital revenue

But Orange warned that with a healthy rivalry within the industry, controls were unnecessary.

"Oftel's proposal seeks to micro-manage one aspect of a successful, competitive industry," the firm said.

"Orange doubts the wisdom of this."

Mobile phone firms have yet to achieve "normal" market returns, needed to maintain revenue to support investment in third-generation (3G) mobile services.

"Today's revenue is what enables 3G investment," Orange said.

The other three firms under investigation are One2One, Vodafone and BT Cellnet, now part of MMO2.

See also:

18 Dec 01 | Business
Greater choice for phone users
12 Dec 01 | Business
Hoping for lower mobile bills?
12 Dec 01 | Business
Oftel slams mobile firms
19 Nov 01 | Business
Mobile phone demand declines
26 Sep 01 | Business
Picking the right mobile phone
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