The cost of calling some mobile phones is to be slashed by a quarter following an investigation into pricing by the telephone watchdog Oftel.
The move, announced by telephone watchdog the Director General of Telecommunications David Edmonds, means the cost of daytime calls from a BT phone to a Vodafone or Cellnet mobile will fall from 30p a minute to 22p a minute.
The matter was referred to the Monopolies and Mergers Commission which decided to back Oftel’s view.
Mr Edmonds said he intended to implement fully the recommendations made by the MMC report. “Throughout the investigation we have argued that these charges were much too high. The MMC conclusions support Oftel’s view. This is excellent news for the consumer,” he said.
As a result the cost of calls from a BT line to Vodafone or Cellnet mobile phones will be reduced from about 30p a minute to 22p.
BT said it estimated that the recommendation would cost it around £100m a year.
The practice of charging for unanswered calls on both networks will also stop. Oftel said if the other two major networks, Orange and One 2 One, follow suit it would save mobile phone users around £1bn a year.
City experts said that while the profit impact would be noticeable it would bring to an end the uncertainty over mobile phone charges.
Shortly before 1200 GMT, BT shares were 7p higher at 867p, while shares in Orange were up 3p at 616p and Vodafone shares were up 9p at 912p.
The full MCC report will not be published until mid-January to allow the Trade Secretary Peter Mandelson time to remove any information which might be commercially confidential.
There are an estimated 12m mobile phone users in the UK compared with just 1.14m in 1990. The number of phones owned worldwide is around 300m, but is expected to reach 1bn by 2005. The last quarter of this year has been the industry’s most successful with 2m new subscribers expected to sign up.
This Christmas is likely to see record sales of mobile phones in the form of presents as the new “pay as you go” deals mean there is no contract or monthly subscription.
Health scare stories still abound. BT recently agreed to invest £3m into a World Health Organisation inquiry into possible links with long-term usage of mobiles and cancer. Last month a Welsh scientist, Roger Coghill, failed in his attempt to sue his local mobile phone retailer for failing to put health warnings on phones.
He said a study in the US showed that regular callers showed a reduction in a cancer-preventing hormone.