Oftel has reported on the outcome of a major review of the mobile market. Effective Competition review: Mobile was published in September, alongside a parallel review of the market for calls to mobile phones.

Taking a forward look at the prospects for effective competition in the mobile sector Oftel's review found that:

• competitive pressures are increasing;
• there is a long-term trend of declining prices;
• commercial deals are beginning to emerge between network operators and new entrants at the retail level;
• Hutchison 3G will soon enter the market as one of the five 3G (third generation) operators; and
• customer satisfaction is high.

Following detailed analysis, which took into account factors such as efficiency, economies of scale, the costs of running different types of network and relative prices, Oftel concluded that the mobile sector was prospectively competitive,

Given this finding, Oftel has decided to remove regulation wherever possible and appropriate.

The review found that two of the mobile operators, Vodafone and BT Cellnet, are still pricing above the competitive level. According to Oftel's analysis, these two operators still have market power and are designated as having significant market power (SMP). One2One and Orange were found not to be pricing above the competitive level and therefore do not have market power.

Oftel believes it is appopriate to lift the Market Influence designations which currently apply to BT Cellnet and Vodafone. The Market Influence determinations include obligations on Vodafone and BT Cellnet to supply service providers with wholesale airtime, and impose a prohibition on undue discrimination.

Oftel hopes that removing these determinations will allow the operators to strike innovative deals that will ultimately benefit consumers and increase competition.

Oftel expects to begin a separate consultation exercise by the end of this year to lift the Market Influence designations.

While the review found that UK consumers generally enjoy a good deal, there were some specific issues that the review identified as cause for concern.

In particular, Oftel will be looking at consumer awareness, SIM locking and international roaming.

Oftel will pursue a co-regulatory approach to help improve customer awareness of prices and to address concerns about SIM locking (see box).

On international roaming (see p x), Oftel will continue to co-operate with the programmes of work being undertaken by both the European Commission and the International Regulators Group. In addition, Oftel has planned initiatives to raise customer awareness of international roaming prices and provided targeted advice to consumers on how to save money when travelling abroad.

As part of these initiatives Oftel also announced a plan to work alongside the Irish regulator, ODTR, to jointly address these problems for travellers between the UK and Ireland.

For further information on the mobile review and international roaming contact
Heather Clayton (tel: 020 7634 8979/e-mail: heather.clayton@oftel.gov.uk).

For further information on MI designations contact Chris Handley (tel: 020 7634 8863/e-mail: chris.handley@oftel.gov.uk).

For further information on SIM locking and mobile price transparency contact Nic Green (tel: 020 7634 8891/e-mail nic.green@oftel.gov.uk).