Mobile phone firms ordered to cut rates

[bongme]

hi

Wednesday, 22 January, 2003

Mobile phone companies will be told on Wednesday that they must cut the price of calls to their networks.

The regulator Oftel is releasing the findings of a year-long investigation by the Competition Commission.

The cost of some calls could come down by up to 30% over three years .

The investigation by the Competition Commission was prompted by the mobile phone operators' refusal to accept cost reductions proposed by Oftel in 2001.

Cost cuts

15% immediately

30% over 3 years

They referred the case to the commission themselves after objecting to Oftel's call for a reduction of inflation minus 12% over four years.

But ironically the findings are thought to go beyond those earlier recommendations.

Operators are expected to face an immediate one-off cut of up to 15% on prices charged to connect calls to mobile networks.

Currently, they typically cost over 55p per minute.

Similar reductions are expected to follow in subsequent years.

'Job cuts'

Consumers will notice the main impact on calls from fixed lines to mobiles.

One operator has previously warned that tough price controls would force it to axe some jobs and reign back its investment in 3G networks.

News of the investigation's findings last week frightened investors and shares in Britain's major mobile phone operators slipped.

Mm02, the former mobile arm of BT Group, is considered to be the most vulnerable as it generates two-thirds of its calls in the UK.

Analysts suggested any fall in revenue would hamper plans to invest in new multimedia technology and gain the edge on rivals.

Bongme