UK watchdog seeks mobile telecoms deregulation

By Georgina Prodhan

LONDON, Aug 28 (Reuters) - Britain's mobile telephony market needs less regulation and more competition, UK telcoms industry watchdog Ofcom said on Thursday, launching a consultation with industry players and consumers on the 15 billion pound ($28 billion) market.

Ofcom said proper access, choice and value for money were becoming more important as mobile increasingly replaces landline and broadband services, with people commonly using cell phones to access the Internet, take and share pictures and find locations.

"With significant market and technology developments under way, now is the right time to ask some tough questions about the future approach to regulation," Ofcom's Chief Executive Ed Richards said in a statement.

"We look foward to a wide-ranging debate on these issues."

One particular issue on which Ofcom has invited comment is mobile termination rates -- the prices operators charge each other to access one another's networks and which account for large chunks of their revenue.

A current regime of reducing these charges annually is due to end in 2011.

About 84 percent of Britons over the age of 8 now have a cell phone, and between them the country's 60 million citizens have more than 70 million mobile subscriptions.

The country is served by five operators -- Vodafone (VOD.L), O2 (TEF.MC), Orange (FTE.PA), T-Mobile (DTEGn.DE) and 3 (0013.HK) -- as well as a clutch of virtual operators who resell air time on the main carriers' networks.

"In our view the potential implications for the UK telecoms market cannot be understated, both for existing mobile players and, perhaps more importantly, for the nation's fixed-line incumbent, BT (BT.L)," Daiwa analyst Michael Kovacocy wrote.

Ofcom said it aims to reduce or remove barriers to entry for new players, for example by releasing new spectrum for transmitting mobile signals.

It also said it wants to improve deals for pay-as-you-go customers and reduce "not spots" in parts of the countryside with limited or no mobile coverage.

Ofcom is inviting responses on its consultation Web site (here) by Nov. 6 and has also launched a blog (here) for discussion. (Editing by Greg Mahlich)