Oftel moves herald mobile shake-out

Don Cruickshank, the telephones regulator, yesterday moved to relax restrictions on mobile phone operators, heralding a shake-out in the industry which could speed up price reductions for customers.

The changes, which apply as soon as possible to the two newest networks, Orange and One2One, will give companies more flexibility over how they sell airtime to consumers. Traditionally mobile companies have sold through service providers, businesses which buy blocks of wholesale airtime and sell it to customers. Vodafone and Cellnet were forced to sell through service providers in the mid-Eighties to encourage price competition while the market was controlled by the two networks.

The move comes as competition between the four mobile networks is stiffening, with recent figures showing Orange and One2One have this year been unexpectedly growing faster than Vodafone or Cellnet.

Mr Cruickshank said he would also free these older networks from restrictions, though he was unlikely to conduct a review until 1998. Vodafone and Cellnet still have the bulk of the UK's 7 million customers. He was still concerned at the high cost of making mobile calls and wanted to see speedier progress towards number portability, where customers could keep their number if they switched networks.

Analysts said the changes confirmed the trend towards the networks buying up service providers, including Vodafone's recent purchase of People's Phone. Jim McCafferty, from stockbrokers Hoare Govett, said: "The days of independent service providers appear to be numbered."