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Oftel to Review Mobile Price Controls in U.K.

[London, ENGLAND] In a move that could signal an end to the current controls on mobile phone charges in the U.K., telecoms watchdog Oftel announced Tuesday it will review whether they should continue beyond 2002.

The announcement comes just as the Government has attracted fierce criticism from a mobile industry that has taken some heavy blows, culminating in the disasterous Orange flotation which has depressed the value of all mobile operators in Europe.

As one industry boss was quoted as saying in The Sunday Times this week: "First they screw us for £22.5 billion. Then they issue a report saying mobile phones fry your brains."

The £22.5 billion (US $32 billion) mentioned was in reference to the amount paid for third generation licenses to deliver Internet services to mobiles. The figure does not include the amount which Oftel says it has saved U.K. consumers by introducing the price controls.

"Oftel's current price controls should save U.K. consumers £1 billion (US $1.41 billion) over three years," said David Edmonds, Director General of Telecommunications.

"I want to establish whether competition has developed sufficiently to keep prices down when the current controls expire in 2002. Otherwise further regulatory action may be needed to maintain the best deal for consumers," said Edmonds.

Oftel has ducked the issue concerning price controls on third generation mobile telephony by deeming it too early to tell whether or not the industry will be competitive.

The main issue in setting controls is the fact that mobile operators make a termination charge to other networks whenever a consumer makes a call to a mobile user. This means that the operator can derive high income at the expense of other networks' customers.

It is difficult to see how Oftel will be able to abolish price controls as long as termination charges comprise around two-thirds of the price the consumer pays for calling a mobile user.

Oftel says the consultation period for discussing the issue will last until May 4. It will publish its conclusions by the end of July this year.



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