Mobile call charges too 'high'

Mobile phone connection charges are too high

Mobile phone charges are too high, a UK Competition Commission initial report has found.

The preliminary findings back up last year's findings by telecoms watchdog Oftel, and will add pressure on mobile phone companies to cut prices.

At issue are high mobile termination charges - the fees that mobile phone operators charge to other telecoms companies for connecting calls to their networks, costs which are passed onto the consumer.

The Competition Commission is now considering capping these charges, but is not expected to decide until January next year.

This could affect all four British mobile network operators - Orange, Vodafone Group Plc, T-Mobile and mmO2 Plc.

These companies now have until 9 August to respond to the Commission's findings.

"Excessive" charges

Last year, telecoms watchdog Oftel claimed termination charges were excessive.

It proposed capping growth in termination fees to 12 percentage points below inflation, effectively a price cut of about 10%.

This could save consumers about £800m, with the cap lasting four years.

However, the mobile operators objected to Oftel's suggestions and Oftel referred the matter to the Competition Commission.

The Commission's main findings are:

• Mobile phone call termination charges are well above the cost of providing the service.

• Over the next four years, regulation will be insufficient.

• Mobile phone companies are using high termination charges to subsidise, for example, subscription charges, handset prices, and to finance retailer incentives

• Fixed line customers, who are not benefiting from these discounts are indirectly subsidising mobile users, as the high termination charges are being passed through to the cost of making a call on a fixed line.

• Mobile phone operators "appear to enjoy" a competitive advantage over fixed line operators, whose termination charges to mobile operators are effectively regulated to levels at or near cost.