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Wednesday, April 14, 1999 Published at 15:42 GMT 16:42 UK


Business: The Economy

Mobiles getting cheaper

Phone use is on the increase...

After years spent paying too much for much too little, things are finally looking up for mobile phone users in the UK.

Between 1990 and 1998 not only did the size, range and quality of mobiles improve beyond recognition - but prices fell by more than two thirds.

Innovative new marketing initiatives, notably the pre-pay packages launched last year, have made mobiles a mass market consumer product.

In the first three months of this year two million people hooked up to a product which just ten years ago was sneered upon as a symbol of ostentatious yuppiedom.


[ image: Mobile phone duels benefit users]
Mobile phone duels benefit users
The good news now for the British consumer is that a range of competition initiatives and new technological developments means that this rate of progress is likely to continue.

Director General of Telecommunications, David Edmunds, the industry's regulator, is currently carrying out a range of reviews.

He has noted that price cuts have been sparked historically by new competition, initially when Orange and One-2-One entered a market dominated by Cellnet and Vodafone.

It also followed when number portability, which means users can keep the same number if they switch from one network to another, was introduced last year.

New competition is planned

He is looking at issues which include the price of phone calls to mobiles from a fixed line and also the potential for opening out the existing mobile networks to other operators.

The deadline for submissions to the latter suggestion is this Friday, 19 April. The aim is to bring new competition to an industry which is limited by the availability of mobile phone frequencies.

It would work in a similar way to, say, competition in the electricity network or the fixed line telephone network, with network owners renting out their infrastructure to new entrants.


[ image: BT sharpening up its act]
BT sharpening up its act
The four existing companies, only too keen to stress the stiff competition in the industry, believe it unfair that the networks they have paid fortunes to create will now be available for rivals to use.

Meanwhile this autumn there will be an auction in the UK for a third generation of mobile licences.

The Universal Mobile Telecommunications Services (UMTS) licences will provide a further leap forward in the services consumers will be able to get from their mobiles which will then become much more than mere phones.

Internet and data traffic

Bids for the UMTS licences are likely to raise billions of pounds for the Treasury coffers. They hold out vast potential for operators of networks which will allow holders to offer Internet and other data traffic facilities.

While this next generation of mobile communications is still two or three years off in the UK, rapid strides are being made in using the current generation of mobile phones to connect to the Internet and to send and receive e-mail.

Later this year Orange expects to be the first operator in the UK to offer mobile video phones, broadcasting 12 frames a second. They are expected to retail at around £500.

While 12m people now have mobile phones in the UK, trusty old British Telecommunications has also enjoyed a boom time in the past decade and says it is poised to win new customers both on the fixed line and mobile side.


[ image: Mobiles are part of everyday life]
Mobiles are part of everyday life
Last week, following clearance from the Department of Trade and Industry, BT renamed Cellnet, of which it owns 60%, BT Cellnet.

It is expected to unveil details soon of a breakthrough which allows phone users to have one number for their home phone and mobile, with calls switched automatically to the mobile the moment the owner leaves the front door.

Fixed lines increasing

This is seen as having vast potential, proving particularly popular for those who run their own business, who can give contacts one phone number.

But while mobile use has soared BT, which has faced competition from cable companies, has also seen rapid increases in its fixed line traffic and connections during the 1990s.

In what was already a mature industry, there has been a growth from 24.6m BT phone lines in 1994 to 27.7m in 1998, not including the separate growth in cable connections.

Good news for consumers

During that same period, with the rapid increase in the popularity of the Internet there has been a soaring increase in the amount of data being transmitted - so much so that it now accounts for more of the traffic than traditional voice calls.

A BT spokesman said: "There will always be occasions when you will want to ring a place, or location, rather than a person. The fixed link capability will always be greater."

The good news for the consumer is that with greater competition on its way in the mobile market, and greater competition between fixed line service and mobiles, the price of keeping in touch over the phone is likely to keep going down.



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