BT Cellnet Told to Stop Subsidizing Mobile Phones

BERLIN (07/03/2000) - U.K. government regulators said Monday that BT Cellnet Ltd., a unit of British Telecommunications PLC, is unfairly hampering competition in the mobile communications market. The Office of Telecommunications (Oftel) issued a draft directive requiring BT Cellnet to stop cross-subsidizing its own retail service providers.

BT Cellnet rejected the accusation of unfair practices.

Mobile network operators BT Cellnet and Vodafone AirTouch PLC are required due to their dominant market positions in the U.K. to sell wholesale airtime to independent retail service providers. Both companies also operate their own retail services. An Oftel spokeswoman said BT Cellnet has been unfairly pricing its wholesale airtime, to such a degree that its own retail services would make a loss if they were not subsidized.

"Reducing the wholesale prices for airtime would be a good way of promoting more competition, so that independent service providers aren't being squeezed," said the spokeswoman, who requested anonymity in accordance with Oftel policy.

She added that Vodafone had also been investigated, but was not found to be unfairly pricing its airtime.

In a statement, BT Cellnet accused Oftel of using an outdated formula to determine whether a company is cross-subsidizing. In addition, it said Oftel made its calculations based on one quarter's market data, which the company called "wholly unreasonable in the highly competitive and changeable mobile phone market."

Oftel, in London, can be reached at +44-20-7634-8888, or via the Web at http://www.oftel.gov.uk/. BT Cellnet, in Leeds, is at +44-113-272-2000, or at http://www.btcellnet.co.uk/.

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