Ref:  95/00
Date: 30 November 2000

Oftel announced today that, on the basis of new figures, it is satisfied that BT Cellnet is not unfairly cross subsidising its own tied service providers.

Revised and updated information from BT Cellnet shows that BT Cellnet’s tied service providers made an average return of between £3 and £10 per subscriber between January and March 2000.

These figures update information supplied earlier in the year, which suggested that BT Cellnet had been unfairly cross-subsidising its tied service providers from its mobile network business.

As a result of the information originally received from BT Cellnet, Oftel issued a draft direction in July to require BT Cellnet to stop any unfair cross-subsidy of its own mobile phone service providers.

The revised information means that Oftel will not be confirming this draft direction.

David Edmonds, Director General of Telecommunications said today:

"Independent service providers must be able to compete fairly with those service providers owned by a particular operator. Further information from BT Cellnet shows that it is not unfairly cross-subsidising its own service providers.

"Oftel will continue to monitor BT Cellnet’s quarterly returns and will take action if there is any evidence of unfair cross-subsidy.

"Competition in the mobile market is increasing. Oftel research also shows that the cost of using a mobile phone has fallen by up to a third in the last 12 months.

"Oftel is currently carrying out a review of competition in the mobile market to establish the level of regulation that might be appropriate in the future. I will seek to ensure that competition continues to develop to enable consumers to get the best deal possible on their mobile phone."

Notes to Editors

1. A copy of the statement issued today is available on Oftel’s website at www.oftel.gov.uk/competition/btce1100.htm. Copies are available to the media from the Press Office on 020-7634 8991 and to the public from the Research and Intelligence Unit on 020-7634 8761.

2. Oftel issued the draft Direction for consultation under Condition 66 of BT Cellnet’s mobile PTO Licence stating that BT Cellnet should take action to stop the unfair cross-subsidisation of its tied service-providers. During the consultation period Oftel received supplementary, audited, information from BT Cellnet that showed that the company’s original return for the quarter to end March 2000 – the period on which the Draft Direction was based - contained certain errors which materially affected the result under the ‘Oftel Formula’. The formula is applied to assess whether or not there has been an ‘unfair’ cross-subsidy of the operator’s own service provider business contrary to licence condition 66. Once these errors had been corrected, the results showed that BT Cellnet was not unfairly cross subsidising its tied service providers.

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