Vodafone to challenge ruling on cutting mobile call costs

The mobile phone operator Vodafone is this week expected to file documents in court that will kick off a judicial review into planned proposals to cut the cost of making calls to mobile phones.

The group is expected to file arguments about the processes the Competition Commission used to formulate the planned regulation rather than about the planned price caps themselves.

Last month, the Competition Commission confirmed it was inflicting a 15 per cent cut on all four mobile phone operators' call termination charges by 25 July along with other measures in a move designed to save consumers £325m to £700m over the next three years.

Termination charges are the fees that mobile phone operators charge other telecoms companies for connecting calls on their networks.

Vodafone and its rivals Orange, Deutsche Telekom-owned T-Mobile, formerly One2One, and mmO2, formerly Cellnet, have all balked at the proposals which are, ironically, harsher than the original recommendations made by the telecoms regulator Oftel.

They say it represents an attempt to micro-manage a highly competitive market, and that, by excluding the impact of the industry's £22.5bn investment in third-generation (3G) licences, the Commission has got its economic models of the industry wrong.

"It [a judicial review] is not about what they [the Competition Commission] decided, it's about how they came to their decisions and whether they were acting according to their remit," one source said.

Separately, Newbury-based Vodafone has written to the Department of Trade and Industry to urge it to amend the Communications Bill to address an anomaly that could, hypothetically, see the Competition Commission pass judgement on its own ruling.

In theory, were Vodafone to appeal the planned proposals on the grounds of pricing alone, then a particular clause in the Bill could see the Competition Commission determine the outcome.

"This means that should Oftel seek to uphold the Competition Commission's recent decision on call termination, as they manifestly intend to do, after July and Vodafone were to appeal that decision then the Competition Commission would become both the appeal body and the author of the original decision," Vodafone argues in the letter.

"This is clearly totally unacceptable and contrary to considerations of natural justice," it adds. Vodafone goes on to suggest that the specific clause in the Bill be amended.