UK Regulators Order Cell Phone Companies to Cut Connection Fees

Britain's telecommunications watchdog (Ofcom) ordered mobile phone companies to cut their connection fees to rival services, a long-expected move leading to lower bills for landline users.

Ofcom expects a cap on the tariffs charged by companies to reduce wholesale charges by between 400 million pounds (US$786 million) and 500 million pounds (US$982 million) annually over the four year period they will be in place.

The regulator said its investigation of the sector, which prompted Tuesday's order, had found that Hutchison Whampoa's British 3G operator 3, Vodafone Group, Telefonica SA's mobile arm O2, France Telecom's Orange and Deutsche Telekom 's T-Mobile had "significant market power."

Hutchison's 3 will be the hardest hit by Tuesday's decision, which was the first time the regulator had levied price controls on 3G networks. Hutchison will be forced to reduce its current tariff by about 45%.

Orange and T-Mobile face price reductions of around 20% while Vodafone and O2 will have to cut their prices by around 10%.

Ofcom said the changes would mean a saving of around 8 pounds per year for landline users over the four years the tariff cap is in place. It will take effect from April 1.

The prices announced Tuesday were lower than those originally suggested by the regulator in draft proposals issued in September, which were criticized as too high by the European Commission and fixed-line operators BT Group and Cable & Wireless.

Martin Selmayr, a spokesman for the European Union, said that the EU had been working closely with Ofcom since the proposal was first issued in September.

Selmayr added that the EU will be reviewing the proposal in detail over the next few days, but in general welcomed the news.