Are millions of mobile bills wrong?

A BITTER dispute between mobile phone giant mmO2 and a small telecoms company selling airtime has raised the extraordinary possibility that millions of customers are regularly being overcharged on their bills.

The row is due to go to court and if the allegations are proved, there will be profound consequences for mmO2, a FTSE 100 company with 13.5m consumers and 6,000 staff. Customers will demand millions in compensation.

OpenAir, which could bring mmO2 to its knees, employs only 14 people. Until recently, it sold mobile airtime to businesses, but now provides data services.

Anthony Lloyd-Weston, OpenAir's managing director, had approached mmO2 - which operates under the brand name O2 - in early 2002 with an idea to provide businesses with pocket computers and mobile phones so that executives could get information on the move.

'You can't make these applications work on every network,' he said. 'You have to pick one, optimise your software to work on it and stick with it.'

Lloyd-Weston, who has spent almost 20 years in the industry, picked mmO2 and the company even backed OpenAir with a £275,000 loan in March 2002.

'Now I regret it,' he said. 'They have just cut my legs out from under me. We performed well above the business plan that mmO2 had made the loan against.'

But even then, problems were emerging. 'In November 2002, I first noted some oddities in the bills,' he said.

OpenAir bought thousands of minutes of mmO2 airtime and resold it to customers as part of its service. They were all on standard mmO2 tariffs.

There are two vital parts to the billing process. First, the calls are metered - the time, duration and destination are measured. No one has suggested this data is incorrect. But then a tariff is applied. Different tariffs combine 'free' minutes of airtime, some for all calls, some for restricted types of calls, text messages and data allowances.

New tariffs are introduced virtually every day as mmO2 competes in the crowded UK market. Lloyd-Weston said: 'In one month, mmO2 was getting it wrong in as many as 25% of bills.'

In early 2003, he wrote to mmO2 outlining one problem and it seemed keen to act. But in April last year, OpenAir complained again. 'In a single month, the over-billing amounted to £100,000,' said Lloyd-Weston. He claims the average over-billing is about £35,000 a month.

Although the company appeared to be ignoring his complaints, Lloyd-Weston received a string of e-mails between executives at mmO2 referring to the problems and discussing how they could be solved. 'I think I was sent them inadvertently because they clearly admit there is a problem,' he said. 'The account manager says free minutes were not included in bills.'

In summer last year, as the problems continued, Lloyd-Weston hired PMSI, a top marketing consultancy with experts in data verification. Patrick Mossiman, director of PMSI, said: 'We were not paid to pick holes in the data to bolster OpenAir's case, but to work out what was going on.' Its report, delivered last September, identified four clear problems, some relatively trivial.

The most serious problem, also identified by CellCall, a second telecoms consultant brought in by OpenAir, involved free minutes. Cell-Call boss Mick Hughes said: 'Customers who had free minutes bundled as part of their call plan had not used their full allowance during a month. Those minutes should roll over to the next month. Sometimes those rollover minutes were simply taken away. It is like you having £120,000 in the bank, then two seconds later you have £60,000 but there has been no transaction.'

The attitude of mmO2 hardened and meetings were now held in the presence of lawyers. 'I was now challenging the integrity of their billing system,' said Lloyd-Weston.

The screws tightened last December as OpenAir renegotiated its licence to act as an mmO2 reseller. Payment terms were slashed from 60 days to 30 and retrospective tariff changes were imposed on OpenAir's customers. Finally, mmO2 wanted a £335,000 bond, though Lloyd-Weston said there was no increased risk.

In February, mmO2 said it would not renew the licence and OpenAir took legal action. Lloyd-Weston has also complained to Ofcom, which is to investigate the findings of PMSI and CellCall.

Peter Erskine, mmO2's chief executive, is working on a new £70m billing plan. An mmO2 spokesman said the dispute stemmed from new regulations that made part of OpenAir's business impossible- a claim strongly denied by Lloyd-Weston. The spokesman added: 'OpenAir has made a claim and we have a significant counter-claim. As a writ has been filed, we cannot comment further. As far as any wider problem with billing, mmO2 is confident that we have a robust and reliable system. That is not to say there are never any problems, but we usually manage to spot them before customers.'

STREAM, which provides ringtones and video clips to mobile phones, will make history on Thursday when it becomes the first British company to distribute its results by text message, writes Helen Dunne.

The company will offer the service to anyone who is interested and expects analysts and investors to sign up to hear the latest news on its interim results.

However, it will also inform the London Stock Exchange through the usual channels on Thursday morning.

Interested parties must text STREAM to 84252.

They will then receive a text message with a link to a Wap mobile internet page highlighting Stream's performance during the six months.

Gordon Robson, executive chairman and chief executive as well as founder of many phone lines offering 'psychic' services, said: 'We're confident that investors and market observers will welcome a fast and easy method to access this news while on the move.'

Last month, Stream, which has more than 250,000 subscribers, announced that it expected first-half profits to top £900,000 - almost double those of the first six months of last year. It also expects to pay its first dividend in the second half.

Robson is recognised as the pioneer of phone voting for TV programmes such as New Faces and Opportunity Knocks.

He is also responsible for the Eurovision Song Contest being voted on by viewers rather than a panel of judges.

Stream is not the first company to use text messaging to distribute key information.

Last year, 2,500 employees of Accident Group, the no-win no-fee personal injury group, received text messages telling them they had lost their jobs.

Stream shares closed at 37 3/4p, down 1 3/4p on the previous day.