Watchdog accuses mobile-phone firms of rip-off

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The Independent Online
CONSUMERS who call mobile phones are being ripped off with high prices, the telephone watchdog Oftel said yesterday. Its director-general, Don Cruickshank said he wanted to see the cost of calls from fixed lines to mobiles slashed by more than a third, from 32p to 20p.

He has referred British Telecom and the two biggest mobile networks, Vodafone and Cellnet, to the Monopolies and Mergers Commission. The networks stand to lose pounds 200m a year if the MMC agrees with Oftel. "Vodafone, Cellnet and BT are using their control of this bottleneck and their market power to charge customers too much," said Mr Cruickshank. "I think it is fair to say being ripped off is the right phrase."

He hoped the MMC would use the opportunity to look at pricing of mobiles as a whole. Around 5 billion minutes are spent on mobile phones every year and the number is growing by 40 per cent. In January the networks revealed record connections in the run-up to Christmas and currently 8 million people own mobile phones.

The networks argue that the cost of calls was reduced from 37p to 32p last October but Mr Cruickshank said it had been "progress under duress" and it was not enough. While local day calls now cost 3.5p per minute and national calls cost 6.7p, calls to mobile phones cost 32p. "To the ordinary consumer that instinctively looks wrong, and they are dead right," Mr Cruickshank added. "What worries people, for example, is when they have made a five-minute call to a plumber or a friend for a quick chat, and they then get a bill for around pounds 2.30." At the moment the customer is charged 32p for a minute's call to a mobile from a fixed line. Of that 19p goes to Vodafone or Cellnet and 6.9p to BT. The rest is accounted for by VAT and discount.

Oftel says that it should be reduced to 20p, with Vodafone getting 13p and BT 4p. They feel there is no justification for BT charging significantly more for a mobile than a landline. "This is business BT are not making any effort to generate. This is business that the advertising campaigns of companies like Vodafone and Orange are generating," said Mr Cruickshank. "Quite why BT's take should be higher for calling to mobile phones than fixed lines escapes me."

Yesterday's announcement follows an 18-month investigation by Oftel into charges made from a mobile phone to a landline. The study found British customers are paying some of the highest charges in the world. Cellnet and Vodafone were also singled out for charges imposed on customers when calls to their mobile phones go unanswered or are diverted to another number. A spokesman for BT said yesterday that the company would co-operate with the MMC investigation but added: "We emphatically reject the suggestion that we are ripping off callers. "The major component of the price charged to our customers is what we have to pay the mobile companies for delivering the call.

Chris Gent, chief executive of Vodafone, said: "Competition is the best form of regulation and the UK, with four mobile phone operators, is the most competitive market in Europe .... We believe the reference to the MMC was not necessary, as the gap between the actual rate of decline of the cost of calls to mobiles and Oftel's target is not that great." Securicor, 40-per-cent shareholder in Cellnet, said the company would be giving "constructive support" to the MMC review but considered that its rates were "fully justified".

Mr Cruickshank said he would like to see uniform prices for all calls to all mobile networks, including smaller operators like Orange and One2One, introduced within the next two years.

But he added that the overall prices paid by customers, including the cost of handsets, line rental and call charges, put Britain in the top of the world league for business customers, although prices for residential users remained less competitive.