Mobile phone alert

Telephone watchdog Don Cruickshank is expected to deliver a stern warning to telecoms firms tomorrow about the estimated pounds 400m to pounds 500m they rake in on calls from home and office phones to mobile handsets.

The reprimand will be included in his pricing review of British Telecom, even though he has no immediate authority to force the companies to cut their rates.

He could, however, order an investigation, the results of which could be passed on to the DTI or the Office of Fair Trading for further action.

The British situation, where owners of plain old plug-in-the-wall phones pay through the nose to reach mobiles, is in sharp contrast to North America, where the cell phone owner pays for incoming as well as outgoing calls. Indeed, in some cases in the UK, calls from terrestrial telephones to cell phones cost more than the same call would if it were made by the mobile user.

In an apparent attempt to undermine Mr Cruickshank's initiative, BT announced last week that it is cutting charges on weekend calls to mobile phones by 55 per cent from 28.32p a minute to 12.5p.

Consumer groups welcomed the move but said rates are still excessive. "They are extortionate," said Noel Scanlon, director of competition policy at the Telecommunications Users Group. "The BT move shows that there is a considerable amount of reduction possible."

The Consumers' Association said it did not believe competition would force down prices on its own. "Given BT's substantial bargaining power in relation to the cost of calls originating on its fixed network, our view remains firmly that these calls should be brought within the scope of price control," it said.

According to BT accounts filed with Oftel, the company passed on pounds 376m in interconnect charges to mobile phone operators Vodafone, Cellnet, Orange and One-2-One in the year to 31 March, 1995. The figure does not include BT's own profit, nor charges collected by other terrestrial operators such as Mercury and the cable companies.

Some of the interconnection contracts are now being renegotiated and, under new regulations, details will have to be made public for the first time.