I regret that the operators have rejected the measures, as our proposals are proportionate and fair for consumers and the industry alike

David Edmonds, Oftel director general

The decision came after the four - One2One, Vodafone, MMO2 and Orange - refused to cap their charges in line with proposals outlined by Oftel earlier this year.

Operators said they were disappointed with the decision and that it could threaten future investment in the UK mobile market.

The regulator has now proposed charge caps on future calls of inflation minus 12% over four years - on all four networks, which could save consumers about �800m.

In other words, with inflation currently at 1.8%, they must cut their prices by 10.2%.

Trump card

In March 2002, current price controls levied on two networks - Vodafone and MMO2 - are due to expire.

But Oftel is still concerned that "termination rates" - the fees that mobile phone operators charge to other telecoms companies for connecting calls to their networks remain excessive.

For example, a peak rate national call over BT's network is currently 24 pence for three minutes, but the same call to a different network would cost 60p, of which 39p is the termination charge.

Oftel's proposals on call termination charges could have a negative impact on the level of future investment by mobile operators in the UK

One2One

The charges also refer to calls made from fixed landlines.

David Edmonds, Oftel director general, said that after considering evidence from the mobile operators, consumers still needed protecting from excessive pricing.

"Because the caller has no choice over which network is being called and the price they have to pay for the call, there is no incentive for the mobile operators to reduce their charges for carrying calls onto their networks.

"I regret that the operators have rejected the measures, as our proposals are proportionate and fair for consumers and the industry alike."

Oftel will make an official referral to the Competition Commission in the New Year.

We believe that consumers get a good deal

Vodafone

The Commission will then decide if Oftel's planned price caps are in the public interest.

A decision would be made within the next six months, although this can be extended for a further six months.

One2One said that Oftel's proposals could have a negative impact on the level of future investment by mobile operators in the UK.

"We are disappointed that Oftel has announced its intention to refer its proposals on call termination charges to the Competition Commission.

"The UK mobile telecommunications market is definitely the most competitive in Europe and probably the world."

A group spokesman for Vodafone said: "We believe that consumers get a good deal."

Service providers

In a separate move, Oftel has removed an existing licence obligation on Vodafone and MMO2 to provide wholesale access to their networks for their competitors, that is independent telecoms and internet service providers.

The rule was imposed sixteen years ago when Oftel felt that these two operators had considerable "market influence" - and should be obliged to open up their networks to other companies.

"It is a step in the right direction. It is a removal of regulation, " said Vodafone's spokesman.