BT leads protest over 'rip-off' mobile phone charges

Ofcom triggered a fierce backlash against its decision not to introduce tougher price controls on mobile phone companies yesterday, with BT Group leading the protests.

Ofcom triggered a fierce backlash against its decision not to introduce tougher price controls on mobile phone companies yesterday, with BT Group leading the protests.

The telecoms and media regulator said it intended to leave in place the current price caps on so called termination rates, the amounts that mobile phone companies charge for connecting incoming calls to their networks. Ofcom said the mobile phone market had not changed sufficiently to warrant a new price regime.

Last September Ofcom imposed cuts to termination rates of 30 per cent, a regime due to last until March next year. Industry experts had expected Ofcom to propose further cuts. Instead, Ofcom has decided to maintain the status quo and has put back a further review of termination rates until March 2007.

BT reacted angrily to the decision, claiming callers from its fixed-line network were being forced to pay high charges when dialling a mobile phone. Gavin Patterson, BT's consumer managing director, said: "Our 20 million customers deserve fair prices. Yet the mobile operators are still charging significantly higher prices for call termination than they need to. This particularly punishes customers who make frequent calls to mobiles. And the regulatory regime still doesn't include Hutchison 3G - a massive international company that isn't subject to Ofcom's cost controls."

New 3G (third generation) mobile phone services were excluded from Ofcom's regulations because they were seen as a nascent market.

The regulator said yesterday that it would now consult on its proposals until the end of August, a move that leaves open the possibility of a change of mind.

An Ofcom statement also raised the possibility that in future, it may abolish its price controls altogether. "Ofcom is consulting more generally on how regulation might be applied to this market from April 2007. It is keen to explore how technological developments or other industry initiatives might remove the need for charge controls in the future," it said.

Jon Miller, a director at the independent comparison service uSwitch.com said: "While it was good for consumers that Ofcom demanded lower mobile call termination charges last year, as suppliers did pass on the savings, it is disappointing that the regulator has decided against imposing further cuts. This means about 6p per minute of the cost of calling a mobile network from a landline goes on paying to connect to that network."

A spokesman for O2 said: "We believe the customer has been well served by competition with prices having come down and continuing to do so, especially as we see new entrants coming to the market. We continue to believe there is sufficient competition to render voice call termination regulation as unnecessary."