mmO2 to delay 3G rollout
January 22, 2003
British mobile operator mmO2 said it would not launch commercial
3G service until the second of 2004 because of the tough price cuts
imposed by the Competition Commission.
Call charges for fixed line to mobile is to be cut by 15% in July
this year and a further 14% for the three years afterwards. Telecoms
regulator Oftel said today the move would save consumers £190m each
year until 2006 for calls from fixed to mobile phones.
mmO2 is planning also to defer planned reductions in call charges
of certain tariffs and handset subsidies to offset the price changes.
The operator fears that consumers would bear the brunt of the decision
through other charges.
Peter Erskine, mmO2 chief executive, said: "Although drawing back
from imposing a very severe initial price cut, the Competition Commission
has clearly delivered an outcome which has adverse financial consequences
for mmO2."
On the other hand, the Vodafone Group has no plans to delay the
rollout of 3G services in the UK said the company's Northern European
director, Peter Bamford. "We are not in the frame of mind to delay
3G rollout as a consequence of this," he said. Bamford expects Vodafone
to launch 3G in the later part of this year but warned a lack of
3G handsets could hinder the rollout schedule.
Vodafone UK and Orange said they would seek a judicial review of
the ruling. Orange had doubts that BT, a fixed line operator, would
pass on the savings to its fixed line customers following the decision.
A spokesperson for Orange said: "The Competition Commission makes
no provision to ensure that the reduction in termination charges
is actually passed on to fixed line customers by BT nor, if it is
passed on, will reduce fixed to mobile call rates alone, rather
than be used to subsidise other fixed line services to the detriment
of fair competition."
The fourth operator T-Mobile suggested that it would either reduce
its handset subsidies or revise its outgoing call rates.
Oftel director general David Edmonds rejected operators' claims
that the changes would impact their business plans. "The Commission
have made it clear that these cuts will not jeopardise the mobile
operators as they will be able to make a fair return on terminating
calls to their networks."
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