Mobile phone charges to fall

Regulator wants incoming calls reduced by 10p a minute

The cost of calling a mobile phone - one of the least understood charges levied on British consumers - is set to plunge by a third following intervention yesterday by the industry watchdog, Oftel.

Ownership of cellular phones is no longer confined to thrusting yuppie executives, the telephones regulator, Don Cruickshank said, yet the industry has failed to make private consumers aware of the true cost of ringing a cellular phone from a standard British Telecom residential line.

Under the proposals, Cellnet, Vodafone and BT would have to knock about 10p a minute off incoming call charges to mobile handsets, which currently average 32p a minute. Out of this the mobile networks take about 75 per cent of the revenues, with BT picking up the rest.

The reduction would knock tens of millions of pounds off the revenues of the mobile companies, just as they appear to be on the verge of another painful price war.

In a clear demonstration of the increasingly tough approach by utility regulators, Mr Cruickshank warned he may have to force them to comply. "My firm view is that prices are too high, which means the industry can act or I will."

Calling a mobile phone from a BT line during the day can be very costly, because the call needs to be routed on to the cellular network in much the same way as an outgoing call. Ringing the Vodafone or Cellnet networks, responsible for 80 per cent of the 6.8 million mobiles in the UK, costs 37.5p a minute from a BT line during weekdays. Only at weekends does the cost drop to a more bearable 12.5p.

The two smaller operators, Orange and One2One, used to have much lower charges for incoming calls from BT lines, but in a controversial move last month they went up by almost 100 per cent, to at least 30p a minute.

None of the mobile networks has disclosed what they make from incoming calls, though Mr Cruickshank estimated combined revenues for BT, Cellnet and Vodafone were about pounds 50m, a claim which angered Vodafone. Terry Barwick, director of corporate affairs, said Oftel's figures were "a bit off the wall".

He added: "People will assume our profits are going to fall by tens of millions of pounds, which they won't."

Last night Oftel and BT seemed to be on another collision course. A BT spokesman said: "We're surprised at this. We maintain that profit margins on our calls to mobiles are the same as for the rest of our network. We'll be trying to find out why they seem too high to Don Cruickshank. They don't seem high to us."