Vodafone challenges Ofcom plans for mobile switching

Vodafone mounted a legal challenge yesterday to plans by Ofcom to allow users of mobile phones to take their existing number to a rival network within two hours.

Last year the telecoms watchdog announced rules that would enable customers to transfer their existing mobile number to a new network within two days by this April. The process is to be cut further, to two hours, by 2009. The present transfer process takes five days.

The new regime was aimed at encouraging more people to change operators and take advantage of more competitive deals. At present, Ofcom believes, mobile users are being deterred from switching because of the slow and complicated transfer process.

Vodafone said that it had lodged a complaint about the rules with the Competition Appeal Tribunal. It claims that the new system is unnecessary. Quicker switching times could, it argues, lead to an increase in mis-selling scams, in which customers are switched to a new network unwittingly.

Its main complaint involves the cost of introducing the revised system. As part of the change, Ofcom has demanded that the phone operators create a central database that will hold details of all switched numbers and enable calls to them to be routed directly, without having to rely on the subscriber’s previous network provider. Ofcom estimates that the database would cost the industry £12 million. Vodafone believes that the figure would be closer to £24 million.

Nine years ago British mobile phone users were among the first to be able to switch to a rival network while keeping their old number, but now Britain lags behind many countries with its long-winded switching process.

Research by the telecoms regulator found that half of those who had switched said that the process could be improved.

Yesterday 3, the smallest of the five network operators, condemned Vodafone’s attempts to stall the overhauled system. A spokesman said: “Making it easier and quicker for consumers to transport their number has been continually obstructed by the incumbent operators at the expense of the British consumer. We owe it to them to move on this now.”

It is likely that Vodafone will be questioned about its actions today when it delivers a trading update on its performance during the Christmas period.

Analysts at Citigroup are forecasting that the third-quarter report will reveal continued strong growth from data services, such as the viewing of videos and downloading of music on handsets. Strong growth from emerging markets, such as India, is also expected.

Citigroup forecasts a 3.8 per cent rise in total service revenues and growth from the European data business of 40 per cent.

In a recent broker note, JPMorgan also predicted that Vodafone would shrug off recent economic worries to report a small acceleration in like-for-like service revenue growth.