Text messaging explosion triggers Oftel investigation

The current controls, scheduled to end in March 2002, were set in 1998 on BT Cellnet and Vodafone after Oftel had referred the two companies to the Monopolies and Mergers Commission.

David Edmonds, Oftel director general, said: "Around two-thirds of the price consumers pay for calling a mobile phone on another network is made up of the termination charge - the portion of the price which their operator pays to the other mobile network."

Oftel is concerned that mobile networks can set excessive termination charges as they will be paid for by the customers of competing networks. Individual networks therefore have no incentive for lowering charges and competition will not necessarily lower costs to the consumer.

The regulator will be looking at the extent of competition in the provision of incoming calls to consider whether new controls should be imposed in 2002, whether they should be applied to all mobile operators and, in the light of recent developments such as SMS, to re-examine the market.

Current controls on Cellnet and Vodafone have reduced call termination charges by 33 per cent and Oftel estimates that they will save UK consumers £1bn over three years.

Edmonds said: "I want to establish whether competition has developed sufficiently to keep prices down when the current controls expire in 2002."