Ofcom has set target prices for mobile calls of 5.3 pence per
minute for networks with second and third generation networks and 6
pence per minute for 3G networks. Those prices, though, take
account of the £22 billion spent on 3G licences in 2000. Without
those charges, 3G network calls would be reduced by almost a
third.
Ofcom regulates mobile prices based on the cost of providing
services, so not including the costs of licence acquisition would
significantly reduce the cost base of networks under consideration
and, therefore, target prices.
"I am concerned that Ofcom's approach to calculate 3G spectrum
costs could hinder the movement towards lower mobile
interconnection prices," said the EU's Information Society and
Media Commissioner Viviane Reding. “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.”
At the height of the dot.com boom in 2000, a massive amount of
money was paid by operators for 3G licences. The planned massive
uptake of mobile phone data usage has largely failed to
materialise, and the EU wants to make sure that consumers do not
pay for the runaway auction of March 2000.
"The Commission, in a letter sent to Ofcom on 22 November and
made public today, considers that the mobile termination rate
charges proposed by Ofcom disproportionately reflect their
historical 3G spectrum auction value and do not appear to reflect
their current value," said a statement from the European
Commission. "In its letter the Commission therefore invites Ofcom
to reconsider the valuation of 3G licences so that users derive
maximum benefit in terms of price."
The Commission said that Ofcom told it that the inclusion of the
cost of the 3G spectrum adds 1.2 pence per minute to the second and
third generation network operators and 1.9 pence to the 3G
networks' costs.
Ofcom did not comment before publication.
