Ofcom, the communications regulator, has begun its first full-scale inquiry into the mobile phone industry in a move that could revolutionise charging for mobile calls.

Ed Richards, Ofcom chief executive, said that he hoped the consultation would reduce regulation and increase competition at a time when the industry is evolving rapidly.

About 84 per cent of Britons over the age of eight own a mobile phone and Ofcom predicts that calls from mobiles will overtake those from fixed telephone lines within the next two years.

The review will tackle one of the most contentious issues in the £15 billion industry: mobile termination rates - the prices the mobile companies charge to access each other's networks. They account for about 20 per cent of operators' revenue.

Mr Richards said that Ofcom would ask “tough questions” and consider scrapping the regime altogether. One possible outcome is a system used in America, known as “bill and keep”, where mobile customers pay to receive calls and texts.

Mr Richards said: “What we want to do and what is right to do at this point is for us to look at a full range of options, not to just presume the way we've done it so far is the right way to do it. ”

About £2.5 billion passes between the networks in termination charges each year.

Jonathan Groocock, telecoms analyst at Investec, said that any significant changes in the system would be beneficial for BT and negative for Vodafone. BT pays about £1 billion a year to the networks for calls from landlines to mobile phones, while a further £1.5 billion flows between the mobile players.

Mobile operator 3, the UK's smallest operator, argues that termination rates prevent competition and claims that it has paid out £190 million to the incumbent operators.

Ofcom set termination rates last year until 2011.

However, BT and 3 have lodged a case with the Competition Commission claiming that the practice is obsolete.

Viviane Reding, the European Union's Telecoms and Media Commissioner, who wants to cut the rates across Europe by as much as 70 per cent, is due to rule on the matter in October. Meanwhile, operators such as Vodafone claim that such a drastic reduction in termination rates would force them to raise prices.

The consultation, which is open to comment from the industry and the public until November 6, will also look at reducing the number of areas with no mobile reception in the UK and address the rising number of consumer complaints about mobile services.

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