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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