Mobile giants face tough price probe

Nick Goodway12 April 2012

BRITAIN'S four mobile phone operators face a wider-ranging Competition Commission inquiry than they might have expected into the prices they charge customers making calls from land lines to mobiles.

In an 'issues letter' published today, the Commission said it would examine whether fixed-line phone companies such as British Telecom, Thus and Energis and their customers are in effect subsidising customers of the mobile companies - Vodafone, Orange, Cellnet and T-Mobile (the former One2One).

Customers making calls from land lines to mobiles are charged up to three times the price of a call from one fixed line to another. Up to two-thirds of the cost of a fixed-line call to a mobile is charged by the mobile firm.

The European Commission last week moved against Dutch mobile operators KPN and Vodafone's Libertel, accusing them of excessive fees on what are called termination charges. The Brussels authorities want to make it easier for national telecoms regulators to force mobile companies to reduce these charges.

Britain's regulator, Oftel director general David Edmonds, made his move in January after the mobile operators complained about his plan to force them to cut termination charges by 12% minus the rise in the cost of living over each of the next four years.

The Commission said in today's letter that it will also look at whether the mobile operators are using termination charges to subsidise call costs, monthly subscriptions or handset prices.

Additionally, it will investigate if they are making excessive profits 'whether overall or in respect of any part of their business'.

A major part of the inquiry will be to study whether termination charges 'are closely related to the true costs of call termination, including the cost of capital'. But the Commission also said it would examine whether further cuts in termination charges forced through by the regulator would make the mobile companies increase their charges for other services and so act against the interest of consumers.

Looking further ahead, the Commission will examine the effects of new technology and third-generation mobiles. It suggested that it may become possible for calls from land lines to be received by mobile customers by means of a network that is not the one to which they subscribe. If that becomes the case, the Commission wants to know who will have the incentive to exploit such technology.

Anyone who wants to comment or raise issues with the Commission has 10 days in which to do so.

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