Phone groups hit out at price controls

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UK fixed-line phone companies have hit out at plans by British regulators for a new price controls regime for mobile operators.

BT, the leading UK fixed-line operator, and Cable and Wireless, a smaller rival, accused Ofcom, media and telecoms watchdog, of giving consumers a raw deal.

Ofcom proposed reductions in the charges that mobile companies can levy on each other, and fixed-line operators, for connecting calls made to their networks. But the cuts were not as steep as those sought by BT and C&W.

Some mobile operators said their customers were unlikely to feel any benefit from Ofcom’s plans because companies such as Vodafone and O2 pay each other similar amounts for connecting calls made to their networks.

But they said customers of BT and C&W could benefit because the fixed-line operators will pay the mobile companies less for connecting calls. Ofcom said fixed-line customers could be as much as £8 better off each year.

BT said it hoped to pass on to consumers any savings it made with mobile operators through the proposed reductions in what are known as termination charges. But it said mobile operators’ termination charges would still be too high. O2, Vodafone, Orange and T-Mobile must cut termination charges to 5.1p per minute by 2010-11.

Hutchison Whampoa’s 3 mobile network, which is to come within Ofcom’s price controls regime for the first time, will be required to cut its termination charges to 5.9p per minute by 2010-11.

BT, by contrast, charges up to 1p per minute for terminating mobile phone calls made to its network. John Petter, BT’s chief operating officer, said Ofcom’s plans were “disappointing”, adding: “The mobile call termination rate has been too high for too long.”

Jim Marsh, chief executive of C&W’s UK business, said: “Fixed-network customers will bear the brunt of paying above the odds for calling mobile users.”

Ofcom said the price regime, which takes effect next month, would cut mobile operators’ revenues from termination charges by up to £500m each year.

The European Commission, which raised concerns about Ofcom’s initial plans last year, gave the final version a cautious welcome. A spokesman for Viviane Reding, European commissioner for telecoms, said it appeared to have taken a “co-operative stance”.

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