Leap in cost of calls to mobiles provokes fury
Thursday 12 December 1996
The unexpected blow to consumers is due to Orange and One2One sharply increasing the charges they levy for transmitting calls from BT's land lines across the airwaves to mobile phone users.
Orange, which was formed through a joint venture between British Aerospace and Hutchison Whampoa, and One2One, which is owned by Mercury, are increasing the charges to BT to close the price gap with more expensive rivals - Vodafone and Cellnet.
The price hike, which will take effect in February, will see the cost of making a one-minute daytime call from a BT phone to an Orange or One2One handset on weekdays leap from 16.71p to possibly as much as 30p. The price of an evening call could go up from 9.85p to 20p. Weekend calls, though, would probably stay at the same price.
Both Orange and One2One are currently believed to be making a loss on incoming calls from the BT network, but feel that the competitive charges are one way of enticing customers away from rivals.
The increase will bring the two network's price structure for incoming calls much closer into line with Cellnet and Vodafone. Calls made from BT to these two operators have come down recently after pressure from the industry watchdog, Oftel, but still cost 37.5p a minute at peak times and 25p during weekday evenings.
The Consumers Association, which has been severely critical of some of the marketing practices adopted by the industry, slammed the price increases. Philip Cullum, the Consumers Association's policy manager, said the price differential between the rival operators should have been reduced through big cuts in Cellnet and Vodafone charges, and not with increases in Orange and One2One charges.
"We would obviously be very concerned if prices were going up just after people bought their phones over Christmas. It's an industry which has grown fast on the back of fairly dubious selling techniques."
Many consumers are already unaware that it costs much more to make a call to a mobile phone from the BT network than it does to make an ordinary local or long-distance call. This is because the mobile company charges BT to connect the call over its airwaves. The bill for this service is then passed on by BT to its own customers, plus the cost of the local call connection and additional profit.
BT declined to comment on the figures, though it is believed that this internal charge that the two networks make to the company for weekday calls is to rise dramatically from 7.3p a minute to more than 15p a minute. The charge for evening and nighttime calls made during the week would rise from around 5p a minute to as much as 12p.
Discussions are still going on between BT and Orange and One2One, though one of the two operators is already thought to have formally agreed the new price regime.
Asked about the increases last night a spokesman for BT explained: "We can confirm that we have been approached by the two PCN operators, Orange and One2One, who are both requesting higher payments for calls our customers make to their networks. Any increase would obviously result in higher retail prices for our customers, which we would regret."
However, Orange insisted even after any price rise it would still be more competitive for incoming calls: "It remains the case that it is substantially cheaper to call an Orange or One2One phone than it is to call a Cellnet or Vodafone customer."
Despite its objections, BT is not believed to have made a complaint about the increase to Oftel. Industry observers cynically pointed out that the move by Orange and One2One would make the Cellnet network, in which BT has a 60 per cent stake, look more attractive. Oftel is also likely to attract controversy because it is thought to have agreed to the price rises.
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