Mobile Operators To Challenge Price War

[krug3r]

[SOURCE Telegraph]

Mobile phone operators are launching a High Court challenge to the competition regulator's plans to cut the cost of calling a mobile phone.

Vodafone, Orange and T-Mobile are all applying for a judicial review of the Competition Commission's decision, made in January, to reduce the cost of calling a handset by nearly 50% over the next three years.

The companies are expected to claim, in a five-day hearing before Mr Justice Moses, that the regulator made key errors of law and process in reaching the decision.

Vodafone is arguing that the commission used a flawed economic model. The mobile phone operator claims that the commission was wrong to base part of its analysis on a so-called "fair charge" that it believes has no basis in marketplace reality.

The company believes that the cost of marketing and maintaining subscribers should be attributed to both inbound and outbound calls, not outbound calls only, as the commission concluded.

The legal action marks the climax of a long battle that has left all four of Britain's operators, which include mmO2, smarting.

Originally, Oftel, the telecoms regulator, had proposed a four-year price control towards the end of 2001, but the operators, led by Vodafone, appealed the ruling. MmO2 is not listed as a party to the judicial review.

As a result a second inquiry was held by the Competition Commission, which found in favour of every substantive point raised by Oftel. The commission also stiffened the price cap, and compressed it into three years.

[theecspec]

Well, 4 months on and have termination charges been reduced???





What do you think? Most people i know have a tariff that included X-network minutes anyway, but there are still a huge number of people on PAYG spendin up to 45ppm ringing another network.

When will they learn.

[Daedalus]

they leagally dont have to lift a finger on reducing costs for another year or so, so their most likley to wait until the last possible minute. But I wouldn't look forward to it if i were you, because the handset prices will most likley rise by another 30% to cover their costs.

[theecspec]

All it takes is for one Operator to do it first, and the rest will follow.

Handset, yeah, they went up in May and yeah probably will do so again, but i think like last time, a few weeks afterwards, once its all died down, certain companies will be giving new business a good deal; its usually, dial-a-phone.

lets just hope come Dec 14th, Orange dont decide to piss off a certain existing customer, especially since my bill that came through yesterday is £75!!!

[krug3r]

Some more news..........

AN OFFICIAL investigation into the British telecommunications industry will pave the way for cheaper telephone, mobile and internet calls.
Millions of customers are set to enjoy cheaper national and international calls after an investigation by the new telecoms watchdog. The review is also expected to see the introduction of a single number for life.

Charges for calls from mobiles to landlines and to rival mobile operators are also likely to fall in the biggest review of telephone costs for 13 years. Ofcom might even order the integration of home and mobile services and an increase in cut-price package deals.

The far-reaching review of the £48 billion British telecoms industry, to be handled personally by Stephen Carter, Ofcom’s chief executive, is to last 12 months. It is expected to replace the anachronistic pricing structure dating back to Victorian days in which long-distance and local calls are charged at different rates. One household bill to cover fixed and mobile lines and the internet may also be available.

It is also aimed at improving the range and quality of fixed-line telephone, mobile and internet services nationwide.

Changes to the law required to introduce the cheaper phone bills could be an eye-catching inclusion in the Labour Party’s general election manifesto.

Many companies and consumer groups have complained for months that there is insufficient competition in the sector and that more operators should have access to the network. Companies are keen to end the dominance of BT, which provides services to 80 per cent of households.

Bill Mieran, chairman of the Telecommunications Users’ Association, said that it was time for consumers to benefit from cheaper calls and accused companies of bamboozling customers with high charges. He said: “We need a one-stop shop for all telecoms. That would be a considerable improvement. We also need to see a convergence between home and mobile phones.There is no reason for the current differentials between local and national prices, for example, or calling a mobile from a fixed phone or a rival operator. We should not have to worry where we are when we make a call.”

He also called for the end to the “rip-off” charges for 0845 numbers. “That is supposed to be a local rate and yet people are charged 5p or 6p a minute, instead of the cost of about 2p.” On 0870 numbers, he said charges were about 8p to 9p a minute when the real cost was about 4p or 5p.

One of the biggest rip-offs for consumers is the international roaming charge levied by mobile phone companies. The prices range from 80p to £1 a minute. A person telephoning from home may pay about 6p to 9p a minute and a business user with a good deal may be charged just 3.5p for a call to the Continent.

Some mobile phone operators routinely charge 12p a text. Handling a text message costs less than 1p a time.

The peak cost of calls from a landline to a mobile phone is 20p per minute. BT is under pressure to reduce this to 13.5p by 2006. The peak cost of calls from one mobile network to another is 50p per minute. Mobile phone companies are under pressure to reduce this to 35p per minute by 2006.

Mr Mieran said that he did not want change to produce poorer services. “Just look what Oftel did to directory enquiries. This was nothing more than ideology. It’s done nothing for consumers.”

The demand for change has gained momentum as companies such as AT&T in the United States have now entered the “phone on the internet” sector. This technology drastically undercuts the prices of conventional phone services and offers unlimited long-distance and local calling using broadband technology.

The demise of Oftel, the former regulator, has given impetus to a shake-up in the market and has allowed Mr Carter to study every aspect of the sector and Oftel’s working practices. He will look to see how efficiently the telecoms industry delivers its services compared with other industries such as digital television and water.

Critics of the former watchdog felt that Oftel took a narrow approach to regulation and did little to reduce BT’s dominance in the sector.

Alan Williams, senior policy adviser for the Consumers’ Association, was delighted by the root and branch review. He said: “If the market is liberated, there will be huge benefits for consumers and if BT loses its monopoly position, there will be lower prices, greater choice and innovation.”

Emma Gilthorpe, head of regulation at Cable & Wireless, said that it had been pressing for such a review for a long time. “People should be able to switch between fixed and mobile phones. If we had a new regulatory framework, we could promote choice, innovation and price.”

Price range

Cost of 10-minute national peak-rate call


BT to BT £0.79
BT to Vodafone £1.89
Vodafone to Vodafone £1.50
Vodafone to Orange £4.00
Vodafone to BT £1.50
(assuming Vodafone anytime 30)