THE controversy over the mis-leading marketing of the Crazy Frog ringtone has badly damaged this formerly fast-growing segment of Britain’s mobile-phone market.

The £250m ringtone business had doubled in size since 2004, but last year’s row about the Crazy Frog and similar promotions has brought growth to a standstill. Ringtone sales for the final quarter of last year are expected to show a decline of 10% or more.

The heavily advertised Crazy Frog, a famously irritating jingle sold by Jamba, was the most high-profile example of a ringtone subscription service. Many consumers thought they had made a one-off purchase, and became angry when they realised they were being billed again and again.

After a media storm, the telecoms service regulator ICSTIS took action last month against Jamba and mBlox, the mobile transaction network that delivered Crazy Frog and other ringtones. An ICSTIS panel found that Jamba “had a careless disregard and unprofessional attitude to consumers in that it patently failed to make clear to them the nature of the service”.

Andrew Bud, chairman of mBlox, said tougher requirements imposed on ringtone subscriptions in August and September had hit business badly and it had still to recover. “Spring has clearly not come yet but the leaves have stopped falling off the trees,” he said.

Other ringtone firms report a similar impact. Martin Higginson, chief executive of Monstermob, which has diversified its business away from Britain, said the ringtone business had probably been severely damaged. “The number of people downloading ringtones has increased but the revenue that’s been generated has declined.”

Ran Anderson, chief executive of Bango, a systems provider to ringtone firms, said: “A lot of people have become more nervous about starting subscriptions, or fearing they’re being tricked into one. The growth has cooled off. People have got wise to the fact that they can send STOP” — a text to cancel the service they’ve signed up to.

Results next week from Verisign, the American owner of Jamba, will give evidence of the extent of the slowdown.

Verisign has already admitted its mobile-content business was harmed by the Crazy Frog marketing controversy.