3 to appear before competition appeals tribunal |
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Thu, 19 May 2005 16:35
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Cellular phone operator, 3, owned by Hutchison Whampoa Ltd is set to appear before the Competition Appeals Tribunal next week as it seeks to strike off a statement made by the U.K. telecommunications and media regulator Ofcom, that it has significant market power.
Ofcom had ruled in June 2004 that all UK based mobile operators including 3 UK, Vodafone Group PLC, O2 PLC, France Telecom SA's Orange and Deutsche Telekom AG's T-Mobile International AG had significant market power and were hence liable for regulation of mobile termination rates.
To recall termination rates are charges levied by a mobile operator on rival networks to connect to its network. Ofcom has been constantly pressurizing operators to reduce their termination rates since they were deemed too high. Last September, Ofcom ordered cuts of 30 per cent in these charges.
| Currently, Ofcom does not regulate 3G termination rates, but this policy is set to change come March 2006. Hutchinson being a 3G operator will then fall under the purview of any new regulations propounded by Ofcom. So far 3 has been exempt from revised termination rates since it does not operate a 2G network. Several mobile operators have complained that 3's termination rates are a tad too high.
Five years ago 3 had been a new entrant into the UK markets and hence was not brought under Ofcom's policy. Since then 3's customer base has risen to around 3 million or a 5 percent market share. Rivals claim that the termination rates charged by 3 give a significant boost to its average revenues per customer.
On Monday, Hutchinson will argue its case before the Competition Appeals Tribunal. It is expected that Hutchinson will claim to have a tiny market share as compared to larger networks like O2 and Vodafone, which have market shares of 20 to 25 per cent respectively. A 3 UK spokesman was quoted as saying, "At no time has Ofcom said it will regulate termination rates."
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