Cost of calling mobiles to be slashed

THE COST of calling a mobile phone could be slashed. The European Commission is planning action amid concerns that mobile telecoms giants are making too much profit.

Mobile phone companies charge landline operators such as BT high prices for connections to their networks, over which they have a monopoly. A three-minute peak call on BT's network costs 24p. The same call from a landline to a mobile costs 60p, of which 39p goes to the mobile company. It has been argued that traditional telephone users are being ripped off to subsidise mobile phone owners.

The fees - known as call termination charges - account for up to two thirds of the cost of calls to mobile phones. According to estimates, these fees are behind the substantial revenues of mobile phone groups.

The Commission believes a reduction of only 3% in these fees would save consumers £200m. If adopted, the rules would make it easier for Oftel, the UK telecoms regulator, to force mobile phone companies to reduce charges. Britain's big four - Vodafone, One2One (soon to be T Mobile), Orange and BT Cellnet - face seeing millions cut off their profits.

The commission's findings will be published in a few weeks. Companies could also face action over excessive call termination charges. The Commission was said to be preparing cases against Libertel, the Dutch mobile phone arm of Vodafone, and KPN, another Dutch operator.

Mobile phone operators claim the industry does not require further regulation. Many companies are struggling with the massive amounts they bid for licences to run the third generation of mobiles, which would be able to bring banking and TV to handsets.

Orange overtook Vodafone last year to have the highest number of active users in Britain at 12.4m. It plans to launch full third-generation phone services by the end of next year.

In December last year David Edmonds, director-general of telephones watchdog Oftel, referred Britain's four mobile operators to the Competition Commission over the charges they make on calls from land lines to mobiles.

He said: 'Because the caller has no choice over which network is being called and the price they have to pay for the call, there is no incentive for the mobile operators to reduce their charges for carrying calls over their networks.' He wants the mobile operators to cut termination charges by 12%.

The mobile phone companies' turnovers were also boosted by the huge increase in text messaging. They amounted to 12.2bn last year, compared with 6.1bn the previous year, at 10p a time. The Competition Commission is due to report in July but could take a further six months if necessary.

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