Oftel refers mobile firms to Competition Commission
OFTEL, THE telecoms regulator, is today
expected to reveal plans to refer its investigation into the cost of calling
mobile phones to the Competition Commission.
The referral will follow the failure of the
David Edmonds, Oftel's director-general, is understood to be standing by early recommendations and feels new price controls are a necessary evil.
Two months ago, Oftel proposed all four operators cut the cost of calling a mobile phone by inflation minus 12 per cent a year for the next four years.
The proposal centred on the firms' "termination charges" - the fees that mobile phone operators charge other telecoms companies for connecting calls on their networks. The price cap was not planned to apply to calls carried over third generation, or 3G,mobile phone networks.
A formal referral to the competition watchdog, however, is not expected until next month, according to sources within the mobile phone industry.
"Oftel will put out a statement tomorrow but formal reference won' t happen until January, perhaps, purely on timing," one industry source said.
As of next month, the Competition Commission will have to launch its own inquiry into the issue that should be concluded within a six-month timeframe, although the process could take much longer.
Mr Edmonds' new measures, which were planned to replace existing controls levied only against Vodafone and the mmO2-owned Cellnet, were due to come into force next spring.
However, Vodafone, mmO2,
Representatives from all four companies are thought to have met with Chris Kenny, Oftel's director of regulatory policy, just over a week ago to try to thrash out a deal. Neither the mobile phone firms nor Oftel, however, were willing to back down. Oftelwas said to have taken the view that no significant new information had come to light to make it change its mind.
Another mobile phone source said: "The industry has failed to agree so he [the regulator] has no alternative but to refer to the Competition Commission. It seems highly unlikely that he'd change his mind [on the proposed controls] and say he'd beenbarking up the wrong tree."
Oftel estimates that the so-called termination charge makes up about two-thirds of the price that a fixed-line operator charges its customers for calling a mobile phone. The same charge, it believes, accounts for about 40 per cent of the cost of callingfrom one mobile network to another.
The referral of its investigation to the Competition Commission is the second that Oftel has had to make. Oftel's recommendations were upheld in 1998 when the Competition Commission, then known as the Monopolies and Mergers Commission, found that thelevel of charges for calls made to mobile phones on Cellnet's and Vodafone's networks was against the public interest.
Consequently, both Vodafone and Cellnet had to cut their average charges by 25 per cent followed by a cut of inflation minus 9 per cent for three years.
Outlook, page 17
Liz Vaughan-Adams, Oftel
refers mobile firms to Competition Commission. , Independent,