An investigation into Britain’s multibillion-pound mobile phone sector is to be launched by the telecoms watchdog amid fears that regulation is not keeping track of radical changes in the industry.

The review — the first of its kind by Ofcom — is to be launched early next year. It could lead to cheaper mobile calls and new wireless services for consumers. It is also expected to address competition issues in areas such as network-sharing, under which previously fierce rivals such as Vodafone and Orange are planning to merge their phone networks in an effort to cut costs.

It could also examine ways to prevent a second “mis-selling scandal” of the kind that is overshadowing the industry at present.

Industry sources said that they expected a “panoramic look” at the market, which would range across consumer, competition and innovation issues.

An Ofcom spokesman said: “The project will assess our future approach to the mobile sector. It will consider the changes facing the sector and any implications for Ofcom’s future regulatory approach. We intend to publish guidelines that inform stakeholders about likely project questions and proposed approach early next year.”

The mobile sector has come under the spotlight recently after a series of concerns about alleged irresponsible and anti-competitive behaviour by the network operators.

Last month, widespread evidence of customers being duped into switching to rival operators forced the telecoms watchdog to issue a warning to the mobile companies about their sales tactics. It is threatening to introduce laws to clamp down on malpractice.

The European Commission, meanwhile, has introduced laws to force mobile companies to cut the cost of using a mobile phone abroad after finding evidence of “unjustifiably high” call costs.

BT and its rival fixed-line telecoms players were the subject of an in-depth investigation by Ofcom three years ago. The inquiry led to the enforced creation by BT of a new independent division, Openreach, to oversee access to its local network.

Until now, however, competition in the mobile sector has been largely untouched by the regulator. Next year’s review will be the first full-scale assessment of the sector.

The UK has more mobile network operators than other G7 country and it is the only country where no single operator has more than a 30 per cent share of mobile subscribers.

However, the onset of “convergence”, under which the line between fixed-line and mobile services is blurring, and the introduction of new technologies such as wi-fi have shaken up the sector. The auctioning of a swath of new spectrums, which could lead to new groups entering the mobile services market, is also thought to have contributed to the need for a review. Next year a second 3G auction will take place.

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