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EU tells Ofcom to pull its finger out

British watchdog inflates costs

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The European Commission says British regulator Ofcom is having a negative effect on mobile rates in the UK. The EC and national regulators are meant to be working together to bring down mobile costs.

The EC says Ofcom's proposed wholesale tariffs for mobile phone termination rates are far too high.

Ofcom is enacting European strategy to reduce the termination charges levied by the five mobile operators. Ofcom hopes the operators will hit these targets by April 2007.

But the European Commission is concerned that Ofcom is allowing too much to be added to charges to offset the cost of 3G auctions. In its letter, it calls on Ofcom to reconsider the charges in light of what they are worth now, not what they were historically.

Information Society and Media Commissioner Viviane Reding said she was worried that Ofcom was slowing the move to lower prices: "I am concerned that Ofcom's approach to calculate 3G spectrum costs could hinder the movement towards lower mobile interconnection prices.

"The commission believes that such costs should not be calculated on the basis of prices paid during the spectrum auctions, which are in today's context inflated. Otherwise, distortions of competition and higher prices for mobile customers could be the result. I therefore ask OFCOM to reassess their method of calculating mobile termination rates in the UK."

The commission's letter is available here. ®

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