Orange is threatening to claw back investment in 3G technology if regulatory proposals to cut the cost of making calls to other mobile networks go ahead.

Last year, Oftel proposed that call termination charges should be reduced by 12 per cent less than the rate of inflation for the next four years. Mobile operators objected to the scheme and in January the Competition Commission was asked to adjudicate. The Commission is due to report its findings next month.

'You will not see any immediate move, but you could see a slowdown in our {3G] roll out plans. Our licence commits us to covering 80 per cent of the population in five years' time, but to reach that you don't need to cover much of the country. You could see the opening up of a digital divide,' Peter Dunn, the director of regulatory strategy at Orange, told The Observer.

A spokeswoman for Oftel said calls between mobiles incur charges "significantly above costs" hence the need for charge controls. She denied allegations that the mobile market was over regulated and said Oftel would withdraw from imposing charge controls if the market was competitive. ®

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