The telephone watchdog Oftel wants mobile phone companies to cut their prices after a study found Britain had some of the highest charges in the world.

Mr Cruickshank says the companies involved are "exploiting a bottle-neck" (29")

Don Cruickshank, Director General of Oftel, also criticised British Telecom after the 12-month investigation found it was charging 10p a minute too much to call a mobile phone from a land line.

The watchdog has referred the matter to the Monopolies and Mergers Commission, which will now carry out an investigation.

Operators of mobile phone networks, including Cellnet, Vodafone, One2One and Orange, are also criticised for the high cost and complex nature of the packages of tariffs and line rentals they sell.

"Mobile phones are not expensive toys"

Mr Cruickshank said he considered calls to mobile phones should be charged at about 20p per minute.

Mr Cruickshank: "calls should be cheaper"

"Mobile phones are an increasingly important part of everyday life.

"They are no longer expensive toys for the few, but the cost of calling them is very high," he said.

Britain currently has 7.3 million mobile phone users but the figure is expected to hit 11 million within the next three years if prices are brought down.

The Oftel survey found the cost of a daytime call to Cellnet and Vodafone from a BT phone has fallen from 37.5p to 32p following demands made a year ago by the watchdog for prices to be cut.

BT defended its charges, saying the majority of its costs were dictated by the payment made to mobile operators for passing on calls.

Consumer psychologist, Peter Cooper, explains the appeal of the mobile on BBC Radio 4's PM programme (1' 4")

It said charges had been reduced over the last 18 months and that its prices reflected the competitive UK market.

Surprise at MMC referral

It said further reductions were "likely", but the decision to refer the matter to the MMC was unexpected: "We believe it to be unusual, if not unprecedented, for the director general to refer an issue to the MMC without having proposed and discussed potential licence changes with the interested parties."

The MMC investigation will look at the charges which BT, Vodafone and Cellnet make for calls to mobile phones.

Vodafone chief executive Chris Gent said competition was the best form of regulation and UK customers benefited from the widest choice of mobile phone services in Europe.

A recent survey suggested it would cost about £27.10 to use a mobile phone for 60 minutes in Britain compared with £10.84 in Germany.

The Daily Mail reported the following statistics for how UK monthly moblile phone bills compare with those abroad. Prices are based on rental plus one hour of national calls.

• UK Cellnet: £26.83
• UK Vodaphone: £26.83
• Japan DoCoMo: £25.48
• UK Orange:£25.46
• UK One2One: £21.74
• Germany TeMobil: £21.27
• Australia Telstra: £20.14
• France Bouygues: £18.10
• Norway Netcom: £17
• Italy Telecom Italia: £13.96

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