The Office of Telecommunications (Oftel) has ruled that BT Cellnet is hampering competition in the mobile market.

Oftel issued a draft directive requiring BT Cellnet to stop cross-subsidising its retail service providers.

Due to their dominant market positions BT Cellnet and Vodafone AirTouch are required to sell wholesale airtime to independent retail service providers.

Both companies also operate their own retail services. An Oftel spokeswoman said BT Cellnet had unfairly priced its wholesale airtime, to such a degree that its own retail services would make a loss if it was not subsidised.

BT Cellnet rejected the accusation of unfair practices. In a statement it accused Oftel of using an outdated formula to determine the judgement. In addition, it said Oftel made its calculations based on one financial quarter’s market data, which the company called “wholly unreasonable in the highly competitive and changeable mobile phone market.”

The Oftel spokeswoman stated: “Reducing the wholesale prices for airtime would be a good way of promoting more competition, so that independent service providers are not being squeezed.”

She added that Vodafone had also been investigated, but was not found to be unfairly pricing its airtime.