UK Oftel refers operators to Competition Commission that could threaten 3G rollout

date: December 12, 2001

Oftel’s proposal to protect consumers by capping the amount the mobile operators can charge for receiving calls onto their networks will be referred to the Competition Commission, Oftel has announced today.

Following its recent review of the mobile markets, Oftel concluded that mobile termination rates are substantially in excess of cost and there is little incentive on operators to reduce these charges.

A peak rate national call over BT’s network is currently 24 pence for three minutes, while the same call to a mobile network is 60 pence for three minutes, of which 39 pence is the termination charge.

However operators said a cut in price would result in revenue fall, therefore threaten the ability to invest in rolling out the next-generation 3G networks in the UK which will cost around £25 billion.

Oftel has proposed charge caps on future termination rates of RPI - 12 per cent over four years, but Orange said Oftel did not take into account the money requires in bringing out 3G services.

Three of the mobile operators publicly objected to the proposed charge controls. Oftel will now refer the matter to the Competition Commission for a decision on whether regulatory action such as charge controls is in the public interest.

Oftel will make its official referral to the Competition Commission in the New Year. The Commission has six months to reach a decision, which can be extended for a further six months.

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last updated: January 12, 2004

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