Telco watchdog Oftel yesterday launched a study into the cost of mobile phone calls.

Oftel will scrutinise the growth in text messaging as part of its review of price controls on calls to mobile phones.

Oftel set the current price controls in 1998 after the Monopolies and Mergers Commission found prices were too high. The controls, to calls on BT Cellnet and Vodafone networks, reduced call charges by 33 percent. Oftel estimates this saves customers around £1bn over three years.

At present, text messaging works out a lot cheaper than making voice calls. For example, on the Vodafone network it costs 12p to send a text message, whereas a peak rate call costs 33p a minute.

According to Oftel, around two-thirds of the price users pay for a mobile call to another network is made up of a termination charge - the portion of the price the operator pays to the other mobile network. It is this that Oftel wants to study.

BT Cellnet and Vodafone both recorded an increase in the number of mobile phone calls sent in 2000. But Oftel research shows this growth to be far less than that recorded for text messaging. An estimated 25 million text messages are sent every day.

Oftel hopes to establish that competition is now sufficient to keep prices down without the need for further controls.

"The rise in text messaging may or may not be sufficient evidence to bring down the costs of mobile calls," said an Oftel spokesperson. "But that is what the research will show us."

Vodafone said it hopes the results will remove the need for price controls, as consumers are now more aware of the cost of using a mobile phone.

The consultation will last until 4 May. Oftel will release its findings by 31 July.