MOBILE PHONE CHARGES REMAIN A RIP-OFF

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The cost of mobile phone calls was to be slashed by at least 30% after a high court ruling. The price cuts are likely to save consumers up to £700m over three years, according to telecommunications watchdog Oftel. A one-minute peak-rate call from a fixed-line phone to a Vodafone handset will fall by 6.5p, to 13.5p. The reductions will apply to all phone calls from one mobile network to another and from landlines to mobile handsets. Three of the four mobile phone networks - Vodafone, T-Mobile and Orange - have been fighting the imposition of price cuts since January, when the competition commission finished a long-running investigation into call charges and ordered a series of changes.

Mr Justice Moses threw out the companies' attempt to force a judicial review of the commission's ruling, saying the regulator's demands for lower prices were "fair, reasoned and not irrational". The phone companies estimate the move will cost them between £1.5bn and £2bn, and warned that the costs would be recouped by lower subsidies on handsets - in effect pushing up the price of a new phone. A spokesman for T-Mobile said, "People should be wary of seeing this as a good thing. The competition commission did not suggest mobile phone operators weren't entitled to recoup their investment, just not in this way. One result will be that subsidies will disappear and the cost of buying a new handset will go up considerably."

The case centred on so-called "termination charges", which are triggered when a call lands on a mobile network. The competition commission is forcing 50% cuts in the charges mobile phone companies levy on calls into their networks, spread over three years. Jonathan Swift, a lawyer for the mobile companies, had branded the price cuts a straitjacket and claimed the competition commission had acted outside its powers under UK and European law. Mr Justice Moses admitted the case was "a very unusual situation", but ruled the competition commission had dealt with the issue fairly. Allan Williams, a senior policy adviser at the Consumers' Association, said, "The whole point of this case was that mobile phone firms were ripping consumers off with charges that they could not see. Perhaps the companies will get the message that they cannot continue to rip off consumers and must charge a fair price for calls to their networks."

He warned the mobile companies that if they tried to "jack up the cost of handsets or fiddle with their text charges" in a confusing way, the CA would immediately demand further action from Oftel. One leading telecoms analyst said handset prices were already rising, and warned that the progress of new 3G technology, which requires mobile customers to buy new handsets, could be held back. David Edmonds, the director general of Oftel, had originally sent the issue of termination charges to the competition commission. He said he was "delighted" by the judgment.

He said, "A major investigation by Oftel found that mobile phone operators have been significantly overcharging consumers for connecting calls to their networks. The competition commission supported my judgment. I am delighted that Oftel's arguments have been vindicated and that our processes and those of the competition commission have been shown to be fair and proper." Mr Edmonds said the measures which must now be implemented by mobile companies would bring benefits to consumers. "I hope that the three companies, who have lost every challenge to Oftel's analysis and decisions, will now behave in the interests of all those UK consumers who call mobile phones," he said.

The high court gave the companies the right to appeal against the decision, although it seems unlikely that they will press on with their legal battle to keep prices high. The UK's fourth operator, O2, had not joined its rivals to fight the ruling. The case will have implications across Europe, as the 15 members of the EU are due to adopt common telecoms legislation by July 25. An Orange spokesman said the Oftel move was "heavy-handed" and added that the firm was looking forward to working with European regulators, which might provide a "less interventionist regime."

In true 'Rip-off Britain' style, Vodafone, Orange and T-mobile threatened to push up the cost of out-going calls and text messages as well as increasing the price of handsets. The phone giants said they intended to make up any losses by inflating other charges.

Millions of people could be paying much higher telephone bills than they think when calling mobile phones because of outdated technology. The reason is that landline phone companies, including giants BT and NTL, don't recognise that people have changed a mobile phone network if they take their old number with them. So people who swap networks to cut the cost of calls from home, such as parents keeping track of teenagers, won't be getting any benefit. The cost of calling mobile networks can vary widely. For example, BT will charge 12.6p a minute to call an O2 number during a weekday but 15.61p a minute to call a Vodafone one. Weekend charges range from 3.61p per minute at O2 to 7p at T-Mobile.

The differences in charges are down to the mobile networks, BT's own cut averages 3p per minute on each of the networks. Mobile operators are reluctant to give figures, but about 4m people are believed to have changed networks, and most choose to take their number with them to the new provider. But as the landline only looks at the number and not the network, the cost of calling that line remains the same. For example if someone switched from Orange to Vodafone, you would expect to pay 6.3p a minute during the evenings if you called them from a BT landline. But BT will still charge the Orange rate of 11.4p a minute. An hour-long conversation would therefore set you back £6.84 instead of £3.78 - nearly twice as much money.

This is because landlines recognise numbers, not networks, BT identifies the network by the first five digits of your number. Les King, a spokesman for BT, said, "If you change operators, you are assuming you'd get a cheaper rate with your new provider, but this may not be the case. Technology could be introduced in the future which tracks networks but currently that's not the case." It's a similar story at NTL and other landline operators. (Source: Mail on Sunday)

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