O2 to delay 3G services over price cut order

Mobile operator O2 has announced a delay in the roll out of its commercial 3G services following an Oftel declaration that it...

Mobile operator O2 has announced a delay in the roll out of its commercial 3G services following an Oftel declaration that it intends to force mobile tariff price cuts on the operator, writes Antony Adshead.

Responding to the Oftel statement, Peter Erskine, chief executive of O2, said, "We are determined to take the necessary action to recover the lost revenue and protect our operating margins and cash flow. As part of this we will review all of O2's UK investment programmes and in particular the timing and scale of our 3G roll-out."

O2 made the statement after Oftel said it would make the recommendations of the Competition Commission's inquiry into mobile phone operators' call termination charges part of its mobile network operators' licence conditions.

The recommendations called for all operators to reduce charges by 15% by 25 July and for there to be three further reductions of 15% each in the period up to March 2006.

Jason Chapman, an analyst with Gartner, does not believe the news will significantly hamper the roll out of 3G in the UK.

"The reduction in interconnection tariffs is a good opportunity for O2 to announce a delay in its roll out, though it is only a slight delay. Vodafone still plans for later this year and Hutchison for the first half of this year," he said.

"Having said that, Gartner does not expect there to be a significant take-off until 2005, and businesses should be planning to use GPRS for the next two or three years for mobile working."

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