Regulators target 3G regulation

UK telecom regulator Ofcom proposed imposing new controls on prices cellphone companies charged each other for connecting calls between 3G networks, a Dow Jones report said.

According to the report, the fees levied on operators to connect between mobile networks, or the so-called termination rates, generated 2 billion pounds in sales annually, making them a significant revenue source for the industry, the telecom regulator said.

Ofcom's predecessor, Oftel, started regulating termination rates for conventional second-generation networks in 2004 to protect consumers from excessive prices for calls made to mobile phones, the report said.

3G networks were exempted because they did not carry a large amount of call traffic, and the technology was new and in development, the report further said.

The report said the controls were put in place until March 2007, but Ofcom said it would continue to regulate termination rates after that date where there was evidence of market dominance.

Ofcom said all five mobile network operators had significant market power in setting the fees. The regulator added that it would need to ensure that regulation on 3G networks would not adversely affect prospects for investment, the report said.