Ofcom defies Brussels on mobile prices
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UK regulators are to defy Brussels and press ahead with plans that will let telecommunications companies recover some of the billions of pounds they spent on third-generation mobile phone licences.
Ofcom, the UK media and telecoms watchdog, is expected to announce next week that it is sticking by its proposed price-controls regime for how much mobile operators can charge each other for terminating phone calls made to their networks.
Ofcom declined to comment.
The European Commission objected to Ofcom’s proposal in November because the plan would enable operators – 02, Vodafone, Orange, T-Mobile and 3 – to recover a significant proportion of the £22.5bn they spent on 3G licences in 2000.
It said Ofcom’s proposed price controls were flawed because they were partly calculated by reference to the value of licences in 2000 at the height of the telecoms bubble.
The Commission expressed concern that Ofcom’s methodology could result in consumers paying too much for calls to mobiles. It urged the watchdog to base its calculations on the current value of licences.
Ofcom was obliged by law to consider the Commission’s views but it is to press on with the broad thrust of its original plans, people familiar with the situation said. Only 02 had written down the value of the licences since 2000 and Ofcom stood by its methodology, they said.
The industry watchdog’s stance will delight mobile operators because its proposed price controls, while requiring reductions in termination charges, will have a much less negative impact on revenues than those sought by the Commission.
The charges are worth £2.5bn to the operators in the UK, or 15 per cent of their revenues.
Operators are braced for a cut to revenues because the Commission plans to force them to reduce roaming charges.
Ofcom’s plans for how much operators can charge for terminating calls made to their
networks are likely to set a benchmark for national regulators elsewhere in Europe.
The price controls regime to be published next week will apply from next month until 2011.
People familiar with the situation said Ofcom’s plans would provide for maximum charges at the lower end of ranges it published in September.
According to those ranges, 02, Vodafone, Orange and T-Mobile should reduce charges to 4.8p-5.8p per minute.
Ofcom also proposed that 3, the operator owned by Hutchison Whampoa, should reduce its charges to 5.4p-6.7p per minute.
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