Ofcom has warning for mobile market


LONDON -- U.K. media regulator Ofcom on Tuesday issued a warning to the cell phone industry, saying that "formal intervention" is a only a slip-up away should the industry's new code of practice show any signs of failing.

The warning accompanied the regulator's release of the new industry-devised code, which aims to stamp out misleading sales and marketing practices in the mobile market.

Ofcom notes that, with more than 66 million active customer accounts, the U.K. mobile telephone industry is a mature and competitive market, with five mobile network operators competing for market share.

But there is an increasing competitive threat from startup mobile virtual network operators, the regulator notes.

It is this increasing competition that Ofcom thinks could lead to difficulty. The regulator warns "it is important that those selling mobile services do not overstep the mark and seek to confuse or mislead consumers."

Ofcom is receiving about 400 consumer complaints about mis-selling per month, billed as "a significant increase" when compared with the number of complaints received at the end of 2006.

The code of practice stems from the watchdog's discussions with the cell operators centering on the upsurge in complaints and includes directives on how complaints to operators should be monitored and handled.

It also sets out best business practice guidelines for those selling cell phones and networks.

"Competition in the mobile market has led to lower prices and a wide variety of valuable and exciting new services," Ofcom CEO Ed Richards said. "We expect this new voluntary code of practice to stamp out mis-selling in mobile; if it does not, we will not hesitate to step in to protect consumers."