Review of the charge control on calls to mobiles.

10
Review of the charge control on calls to mobiles

Transcript of Review of the charge control on calls to mobiles.

Page 1: Review of the charge control on calls to mobiles.

Review of the charge control on calls to mobiles

Page 2: Review of the charge control on calls to mobiles.

Main milestones

• February 2001 - Consultation Document

• 26 September 2001 - Statement and proposed licence modifications

• 7 January 2002 - reference to the Competition Commission

Page 3: Review of the charge control on calls to mobiles.

Current Controls

• 1998 MMC Recommendations

• Charges reduced by 25% for 1999/2000

• RPI-9% for 2000/01 and 2001/02

• Controls saved consumers £1 billion

Page 4: Review of the charge control on calls to mobiles.

Breakdown of price of calling a mobile

BT’s ppm daytime price to call Vodafone

Price VAT BT’s keep Vodafone

20p = 3p + 3.5p + 13.5p

Page 5: Review of the charge control on calls to mobiles.

Conclusions in Statement

• weak competitive pressures on termination charges– calling party pays: no choice but to pay the

charge of the terminating operator– incoming call costs not a significant factor to

consumers– some evidence of substitutes and closed user

groups but insufficient– little evidence of operators competing

• termination charges excessive in relation to cost, which means high retail prices

Page 6: Review of the charge control on calls to mobiles.

Market definition

• Separate market for call termination on each operator

• all 4 operators with market power

Page 7: Review of the charge control on calls to mobiles.

Proposed licence modifications

• RPI - 12% control on termination charges

• mobile to mobile charges as well as fixed to mobile

• runs for 4 years with a review after 2

• applies to all 2 G voice calls

Page 8: Review of the charge control on calls to mobiles.

Regulatory proposal

• Proportionate and appropriate regulation

• Consumers will save c.£800m over 4 years.

• Peak retail price should fall from 20ppm to 14ppm by 2006

• All four operators rejected proposed licence modifications

Page 9: Review of the charge control on calls to mobiles.

Competition Commission Reference

• CC has six months to make inquiry in the public interest

• seeking evidence from any interested party

Page 10: Review of the charge control on calls to mobiles.

Contact at CC

The Reference Secretary

(Mobile Phones)

Competition Commission

New Court

48 Carey Street

London WC2A 2JT

email: [email protected]