UK 3G Market Escapes Regulation

Europe :Measures to promote competition and reduce the price of calling a mobile phone have been proposed today by Oftel.

Inset is David Edmonds, Director General of Telecommunications, Oftel

Action is necessary because consumers pay too much for making calls to mobile phones as they have no choice but to incur the high connection charge set by the operator of the network they are calling.

Oftel is reviewing the calls to mobile phones market as part of its work to implement the new EC Directives on electronic communications networks by 25 July

This is a separate review from the recent Competition Commission investigation into call termination rates, which was carried out under the current telecoms regulatory framework. The Commission made recommendations for charge controls over the next three years, but the introduction of the new Directives means Oftel is required to carry out a fresh review under the terms and procedures of the Directives, before reaching its own conclusions.

The key proposals set out Oftel's review of the calls to mobile phones market are to:

• protect consumers from excessive call termination charges through a continuation of controls to reduce the amount mobile operators charge to connect calls to their networks;

• promote competition between operators by ensuring equal access and no undue discrimination against other operators for terminating calls onto the mobile networks; and

• not impose regulation on the 3G market as these are new and innovative services and regulatory controls would be disproportionate while the market is developing.

David Edmonds, Director General of Telecommunications said today:

'Calls to mobile phones is a separate market from the mobile retail market and has no effective competition, because consumers cannot choose between terminating networks when they make a call to a mobile phone.

'Calling someone on their mobile phone is expensive because consumers have no option but to pay the connection charge set by the operator of the network they call.

'Oftel believes that measures are needed to require the mobile operators to reduce their call termination charges, which should result in cheaper calls to mobile phones.

'Oftel's proposals are in line with the Competition Commission's original recommendations and consist of three annual cuts of around 15 per cent over the next three years.

'In line with Oftel's earlier commitments, we do not to intend to place any regulation on the 3G market. These are new and innovative services and inappropriate regulation at this stage could damage the evolution of this new market.'

The consultation period ends on 24 July 2003.

Oftel has also published today a consultation document on whether the current requirement on O2 and Vodafone to negotiate an agreement with 3G new entrant operator Hutchison 3G (3) to allow customers of 3 to roam over their 2G network should continue. Under the new EC Directives all licences will be revoked which means the current obligation on O2 and Vodafone to offer roaming will fall away.

Oftel believes that 3 will continue to need access to national roaming while it is building its 3G network, so the obligation should therefore remain, and apply to all four 2G mobile network operators.