The proposed 02 / 3 merger is an example of a major decision affecting the UK, which is now in the hands of the EU. Despite strong opposition from Ofcom and the Competition and Markets Authority (CMA) the final say on the deal falls to European competition commissioner Margrethe Vestager.
The CMA expressed “serious concerns” and has warned the merger could cause “long-term damage” for UK consumers as it would leave only three mobile networks. Ofcom has long said that there needs to be four suppliers. If this goes through then there will only be three. The CMA has said if the deal goes through then a lot of spectrum should be sold off to allow a fourth supplier to enter the market. With recent reports from Which? and Ofcom showing a high level of dissatisfaction with providers – keeping a lot of choice is essential.
That need not be a problem if there were plenty of Virtual Mobile Network Operators (VMNOS). In the fixed line market the equivalent WLR (Wholesale Line Rental) market means customers have a large range of choice. However, ask any of the VMNOs, both residential or business, about the issues they have had over agreeing deals and volume commitments and it is no surprise how few there are and why some have been abandoned, for example, Sainsburys where 150,000 users were apparently not enough for Vodafone to agree a deal.
With landlines there are literally hundreds of companies you can go to and buy a phone line or broadband service from. Not that the fixed industry doesn’t have its own challenges, such as whether BT Openreach should be separated from BT. But where it is different is that it is relatively easy for a supplier to buy capacity or lines from BT and resell them at a price of their choosing and wrapped up into different packages. The mobile market is more geared around people reselling the networks’ product rather than a more open wholesale market where new companies can just buy capacity and create their own packages, bundles etc.
The market also tends to close rank, for example to challenge the concept of carrying other network calls when they have no coverage (as happens when you are abroad). They will even go as far as to effectively force a company out of business, as happened with Phones4U which was forced out of business when all the networks abandoned them. The network operators may argue that they spent a lot of money buying 4G licences, but their annual reports and accounts show they are not exactly hard-up for a penny or two. The main providers made combined profits in excess of £6 billion. We are pleased that the merger has been turned down – and see this as a positive step for consumers and the industry. Also, as has been shown so often, the biggest spur for improving customer service is competition and fear of loss of business. At the moment it is a merry-go-round of supplier swapping; how many people / businesses have tried out all the major suppliers and then gone back to where they started? In conclusion, continually reducing the number of suppliers is bad news for everyone but the networks themselves.
