Mobile operators slam Oftel's price cut plans

Winged watchdog mulls responses

By Kieren McCarthy, 23rd November 2001

Vodafone, One2One and Orange have slammed new mobile call price controls proposed by Oftel.

In written responses posted on the winged watchdog's Web site, all four mobile operators are unhappy with plans to cut mobile calls by RPI -12 per cent i.e. if inflation (as measured by the Retail Price Index) goes up by five per cent, then prices will have to go down by 7 per cent.

The price plans were announced by Oftel on 26 September this year and the deadline for consultation is this Monday (26 November). From there it will consider all the responses and put out a final decision. If the mobile companies refuse to go along with it, they can take the case to the Competition Commission.

Vodafone, in a one-page letter, is the most damning of the operators. "We hereby object to the adoption of the proposed modifications. Please treat this letter as comprising our formal objecting to the proposed licence modifications," it reads.

One2One goes for a different approach - a huge 31-page document with executive summary and lots of tests, models, definitions and even flow charts. Distilled down, it calls Oftel's plans "flawed, inconsistent and incomplete".

Orange and BT Cellnet (now mmO2) chose to make their responses confidential, but Oftel summarised them thus: "Orange: Orange has not consented to the proposed licence modifications and is still considering whether or not to make a formal objection; BT Cellnet: At this stage of the consultation BT Cellnet has neither consented to nor objected to the proposed licence modifications."

Orange told us that it made its response confidential "in order to give Oftel room to manoeuvre". However it has put out a press release saying "Orange believes that such price controls are not to the long term benefit of the customer and urges Oftel to reconsider its position." BT Cellnet has told us it is "keeping our options open".

Oftel was in an ebuillent mood when it made the price plans public. It actively criticised BT Cellnet and Vodafone for charges prices that are "on average at levels higher than would be seen in a truly competitive marketplace". It also decided to extend the price controls for the first time to Orange and One2One.

It is difficult to know what will happen from here. Oftel has been criticised in the past for caving in to companies' complaints - particularly BT, but has recently taken a harder line following criticism by the government.

Whatever happens, we are only likely to see the end result. A Vodafone spokesman told us: "Once the consultation is over, we will not be rehearsing our arguments in public." ®