Director General of the UK telecoms watchdog, Don Cruickshank, has fired a parting shot at the UK mobile phone operators demanding that they reduce their charges, which could result in 200m pounds being cut from their revenues per year, and considerably more from the fixed line telcos. Cruickshank has referred three companies to the Monopolies and Mergers Commission (MMC), two mobile operators Cellnet Mobile Communications Plc, 60% held by British Telecommunications Plc, and Vodafone Group Plc and BT itself. Britain’s two other mobile operators, Orange Plc – whose biggest shareholders are Hutchison Whampoa Ltd of Hong Kong and British Aerospace Plc – and One-2- One Ltd, a joint venture between Cable & Wireless Plc and US West Media Group Inc, were not specifically mentioned in Oftel’s statement. Oftel says it has investigated mobile pricing over the past 18 months during which the price of such a daytime call for a BT customer to Vodafone and Cellnet has dropped from 37.5 pence per minute to 32ppm. But, according to Cruickshank, it is still too high and should be cut to around 20ppm. The move, announced yesterday, immediately wiped almost 2bn pounds off the market value all the major players combined, BT was trading down 2.48% at 5.97 pounds with its Cellnet part-owner Securicor dropping 3.4% to 3.50 pounds. Vodafone closed down 3.73% at 5.17 pounds and BT’s market value alone fell by 961m pounds. Oftel’s decision to hand over the investigation to the MMC was criticized by both BT and Vodafone suggesting that Oftel had perhaps lost its objectivity over the issue and that such action to cut the pricing of mobile tariffs is unnecessary, respectively. For example the operators have already agreed to cut the current tariff of 32ppm to 25ppm in August. The UK Monopolies Commission will initially only investigate the charges the fixed operators pay to the Cellular operators for the calls going to mobile phones. But Oftel believes that the inquiry could snowball and be subsumed into a European Union probe launched into the European Mobile phone on February 10. The assertion that a cartel is operating is possibly a valid one, as the majority of the cash generated in the industry is from the payments paid by the fixed line operators to the mobile phone companies.
