The Federation of Communications Services is concerned about proposals which would allow the UK cellular duopoly of Cellnet and Vodafone to sell their network services directly to the public. The Federation wants the division between network operators and service retailers maintained and says that allowing the two to merge would constitute a reversal of the competition that has been set up. If adopted, the proposals would probably lead to to Cellnet and Racal Vodafone integrating service providers into their main businesses. At the moment both are subsidiaries with separate accounting procedures. Chief executive of the Federation James Malcolm says the effect would be to reduce pressure on networks to keep prices down and the visible, open and public evaluation of network services would become blurred at the edges as it would be impossible for customers to evaluate networks from a subsidised provider. However, Malcolm maintains that independent service providers not attached in any way to either network operator would survive the change, but that they would not be competing on a level playing field. The Federation is particularly worried that if the service providers were integrated into Cellnet and Vodafone, cross-subsidising from other revenue streams might occur. This would be a great advantage for the two operators in an industry that is characterised by high gearing. And despite large subscriber bases, service providers hit by high interest rates and unable to ride out the recession, have been forced to close or merge recently. The proposals were made last June, when licensing terms for the forthcoming Personal Communications Networks were discussed and if adopted they would come into effect in 1993. Malcolm says the Federation wants to see no amendment in licences to cellular and PCN networks on its existing basis and the that move would weaken, not strengthen the rules.
