UK watchdog fears Voda-Three merger would bump phone bills for customers
- Reference: 1726224529
- News link: https://www.theregister.co.uk/2024/09/13/uk_cma_fears_vodathree_merger/
- Source link:
The Competition and Markets Authority (CMA) has published its [1]provisional view on the union of Britain's third and fourth largest cellular operators. It fears the consolidation would lead to price hikes for tens of millions of users, and possibly reduced service, such as smaller data allowances in contracts.
In its guidance, the CMA also said the merger might impact on Mobile Virtual Network Operators (MVNOs) such as Lyca Mobile, Sky Mobile and Lebara, which rely on the companies with infrastructure to run their own services. As the merger would cut the number of network operators from 4 to 3, this may make it harder for them to secure competitive terms.
[2]
The watchdog was similarly skeptical of assertions the move, [3]announced last year , would improve the quality of mobile networks. The CMA said it "considers that these claims are overstated," and the post-merger biz would not necessarily have the incentive to follow through on its proposed investment program.
[4]
[5]
Potential remedies floated by the CMA range from simply blocking the plans, to requiring the divestiture of certain mobile network assets and spectrum from the conjoined entity. Other remedies under consideration are requiring a commitment to deliver the network investments and pre-agreed non-discriminatory wholesale terms for MVNOs.
Vodafone and Three were quick to respond, issuing a detailed rebuttal that seems to show they anticipated the CMA findings.
[6]
The pair say in their joint statement the planned amalgamation is a "once-in-a-generation opportunity to transform UK digital infrastructure with £11 billion ($14.4 billion) of investment," and disagree with some of the findings, claiming the proposal is pro-growth, pro-customer and pro-competition.
In particular, they insist the coupling would not affect their pricing strategy, and the CMA's price rise assumptions are contrary to their business and investment plans. All social tariffs will continue to protect vulnerable users, they claim.
On MVNOs, Voda and Three contest that 90 percent of these in the UK rely on the two big players – BT/EE and Virgin Media O2 – so their merger would therefore boost competition in the wholesale market by creating a third player with the scale to compete.
[7]
"The current UK 4 player mobile market is dysfunctional and lacks quality competition with 2 strong players and 2 weak players. This is reflected in the current state of the UK's digital infrastructure that everyone agrees falls well short of what the country needs and deserves," claimed Three UK Chief Executive Robert Finnegan in a statement.
Expert opinion seems to be largely behind the mobile operators rather than the CMA.
"At first glance, the CMA's concerns make for uncomfortable reading for Vodafone and Three as they battle for approval for their crucial merger," said Kester Mann, Director of Consumer and Connectivity at CCS Insight.
"However, many of these had been outlined previously, notably the potential for higher prices and likely impact on the wholesale market. The main knockback to the merging parties is that the CMA considers claims of superior network quality post integration to be overstated," he added.
Mann said the CMA's willingness to consider "behavioral remedies" such as enhanced network access for virtual operators or safeguards for retail customers, is significant as many had feared that more onerous "structural remedies", such as selling assets might be required.
"I retain my view that approving the merger would be the best outcome for the future of the UK mobile industry. A combined Vodafone and Three can make more efficient investments and push BT and Virgin Media O2 to raise their game too, boosting the market's long-term connectivity credentials."
Telecoms analyst at PP Foresight Paolo Pescatore agreed, saying: "As expected, the CMA focuses primarily on pricing implications for consumers, but focusing only on price ignores the fact that the merger will bring much needed investment across the UK."
[8]Competition watchdog accuses Google of abusing ad dominance
[9]UK comms watchdog banning inflation-linked mid-contract price rises
[10]Vodafone, VMO2 shuffle spectrum to woo watchdog amid merger moves
[11]Axiom Space dials up Nokia to connect moonwalkers to 4G
Even if the price increase is to be believed, he added, which the telcos dispute, "It's pence per month and doesn't in any way outweigh the benefits of building the network the country deserves."
Analyst Megabuyte called the findings a "damning indictment" of the merger, adding: What really stands out from the CMA's commentary is the fact that it doesn't actually believe commitments to invest the benefits of the merger into customers / pricing / service quality – suggesting that it instead believes that will simply benefit shareholders. The key pushback from the telcos is that despite the number of MNOs reducing from 4 to 3, this merger does improve competition."
UK union Unite previously claimed the merger between the mobile operators would lead to jobs cuts, and said the deal was simply about " [12]corporate greed ".
Stuart McIntosh, the chair of the inquiry group leading the investigation, said the CMA has taken a thorough, considered approach to investigating this alliance.
"We will now consider how Vodafone and Three might address our concerns about the likely impact of the merger on retail and wholesale customers while securing the potential longer-term benefits of the merger, including by guaranteeing future network investments," he stated.
The CMA is awaiting responses to its notice of possible remedies by September 27, and its provisional findings by October 4. These will be considered ahead of the CMA issuing its final report, due by December 7. ®
Get our [13]Tech Resources
[1] https://www.gov.uk/government/news/cma-sets-out-provisional-view-on-vodafone-three-merger
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZuRhprohtnBbGrLsxKZUCAAAAlg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.theregister.com/2023/06/14/its_official_vodafone_and_three/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZuRhprohtnBbGrLsxKZUCAAAAlg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZuRhprohtnBbGrLsxKZUCAAAAlg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZuRhprohtnBbGrLsxKZUCAAAAlg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZuRhprohtnBbGrLsxKZUCAAAAlg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2024/09/06/uks_competition_watchdog_takes_issue/
[9] https://www.theregister.com/2024/07/19/ofcom_inflationlinked_midcontract_price_rises/
[10] https://www.theregister.com/2024/07/03/vodafone_vmo2_network_sharing/
[11] https://www.theregister.com/2024/08/22/nokia_axiom_space_4g/
[12] https://www.theregister.com/2023/12/14/unite_the_union_claims_vodafone/
[13] https://whitepapers.theregister.com/
Re: "Two strong players and two weak players"
Two turkeys don't make an eagle.
Re: "Two strong players and two weak players"
Voda were much worse for the 6 months I foolishly left 3.
3 have been rock solid for data since 2011. Never forget calling me friend from Tokyo on my DoCoMo FOMA phone which had a deal with Hutchinson to deal the first proper videophone international. Back in 2003/2004 that was.
Voda on the other had are horrible. The whole company is like a great big Phone Shop/mixed with Chavs collection. Their Xmas bash at Earl's Court had our unit (Global & Mobile Intenret) sat as far away as possible from them. Chav City it was.
Not only that, Vodafone lost out to the iPhone. Picture the science: Dusseldorf in the freshly repainted old D2 head offices now ours, Sept 10th 2001!. The small team of Global Stragey are gathered with me from Voda chairing. Sir Chris has left and some new CEO Harvard WASP twat thinks we should buy Yahoo! "We are at a crossroads", say I. "The new CEO wants David Beckham and the new Sharp camera phone we got when we bought J-Phone. Head Office in the Strand and Reading research both disagree. We want an app store that develops the i-mode model from DoCoMo. [Sept 10th 2001]
Guess how it went. We, moved on and no app store appeared. Beckham pimped the phone and Vodafone Live was just like ITV4: sweet, but sickly and only possible in short bursts. Apple took nearly 6 years despite us asking them to build a Apple Phone with a 'OSX mobile' using i-mode/Vodafone Live UI but with a c&xHTML-based app store a la i-mode in 2002.
But Vodafone are greasy. I worked with some boys and girls from the Newbury dev office and it isn't often that I felt dumb in comparison. They invented GPS location-based services and didnt sing about it. Just sent me an email saying plug this in. IQ150+. I bet they are at SpaceX or somewhere like that now.
despite us asking them to build a Apple Phone with a 'OSX mobile' using i-mode
when i say us, i mean me and the folks from Newbury. When we saw the closed garden Vodafone Live planned based of my style-guidelines for the old Ericsson r380, we approached Apple.
the plan was to get Apple to port to Java with a Sidekick-style slide keyboard & stylus based off a J-Phone exclusive we had from National (Panasonic to you) in the works. It had Java Mobile edition running as a VM or bare metal for the whole OS and that was in 2002! Apple just had to port a mini-version of OSX to Java mobile OS. We even had a whole team in Paris ready with their Java Beans brewing. It was the App store that again failed them. The OS port was not problem - we even reverse-engineered a demo for them on the pre-release National FOMA phone.
They just could not understand why and how an app sotre would fit into their hardware models. iMacs were all they thought about. Mobile was their naffy 2-cans-and-a-piece-of-string CDMA or some such nononsense.
Six bloody years to make an app store when i-mode had it in 1999! You give them the blueprints, the models, mock-ups and demos. On a plate. Even then it took 6 years to copy i-mode. I didn't hang around wating for 6 years. no sir.
Toby something, CTO UK Voadfone Live 2002, The Strand, 3rd Floor with the proles
Where are you now Toby? Any Commenturds who know this returd speak now.
To you, I ask: First, I was Head of Mobile Global and your role didn't interest me when your boss tried to lure me from Global to UK team when we were at the St James Sq office at a Xmas bash. Second, we sold you out to Apple even if it took then a long time. It was only a matter of time before that chap who replaced Chris was going to f things up. You were our conduit. We gave Apple nearly everything from Research wrapped up in a Java Mobile OSX VM. No need for an 'app' app. HTML will be fine. Run the browser outside on bare metal minimal OEM OS (Symbian probably) and sandbox the VM. That was for 2002. So they just updated the tech for 2007/08
Just because I won all those awards for the UK, French, Greek, Japanese, Italian, Spanish, German and more sites and you just won being moved into Business Development after Live failed to be rolled out globally 'cause it was closed garden u monkey and was never going to fit into all those different cultures.
And Voda lost the app store. Many of the Newbury folk from research moved away. I often think of them. There is a movie in them for sure. Me too. I returned to the source in Japan.
"Java Mobile OSX VM. No need for an 'app' app. HTML will be fine."
The the main reason Apple went for HTML5 apps initially until everyone said, "Are you mad? Just let them be native as this isn't 2002 and clock speeds can handle it now".
Our model we gave them used x/cHTML Openwave/Symbian browser with a Java sandboxed VM for Finder and dumb Phone OS functions. It made sense for them in 2006 to go HTML5 if you are working off something modelled 4 years earlier.
Re: despite us asking them to build a Apple Phone with a 'OSX mobile' using i-mode
"We want an app store that develops the i-mode model from DoCoMo. [Sept 10th 2001]"
You mean the i-mode "concept" or to actually deploy i-mode infrastructure? By that date Vodafone OpCos in various countries had already deployed WAP infrastructure for a year or two.
"the plan was to get Apple to port to Java with a Sidekick-style slide keyboard & stylus based off a J-Phone exclusive we had from National (Panasonic to you) in the works."
J-Phone sold a National/Panasonic manufactured touchscreen phone (don't remember if it had a stylus) as far back as 1998, though obviously without installable "apps", just whatever the OS provided.
Re: "Two strong players and two weak players"
Three was great if you wanted to have a boring train ride.
I almost never could get any kind of reception on trains with Three in London.
Also when not on trains, it was common to walk around to find reception or to have reception in one room, but not in another.
I mean don't get me wrong, having no reception is a great excuse for not taking calls.
Finally ditched it for Vodafone which has been an improvement.
Did I mention poor customer service?
I really hope they don't merge this crap with Vodafone.
Or we could just nationalise infrastructure, thereby saving 2/3rds of the costs of the backend because you all won't need to build your own masts and can share them properly, and then everyone becomes an MVNO and competes on the basis of provision of service.
Then, maybe, just maybe, I might get a 21st century connection in a rural area, and not have to have regular conversations like I had with a new neighbour where they said "What mobile phone network actually works around here" because his half-dozen devices on the "wrong" networks got pitiful signal.
The number of cell towers in the UK is ~1.5m. I'm pretty sure you could halve that, AND provide better speed and coverage.
If you were talking about electricity, gas, water, rail; I would agree. But telecoms is one thing that has got better since privatisation, and the reason it has got better is that there is an actual genuine choice of suppliers.
People were saying competition had improved rail and energy until it became clear it hadn't. With telecoms, there's been such change of technology including that of customer service and UX that it's difficult to assert that competition has been the driver.
Also, with both gas, leccy and rail, the underlying infrastructure has to all intents and purposes been directed by government policy, and delivered as a monopoly. You can argue that there's multiple electricity network providers, but not to your office or house there aren't, and there's no real competition that consumers benefit from on the infrastructure side.
These things are natural monopolies (and fixed line telecoms certainly should be, rather than current poor effort in remote areas, and massive duplicative over-build in many densely populated areas.
"These things are natural monopolies (and fixed line telecoms certainly should be, rather than current poor effort in remote areas, and massive duplicative over-build in many densely populated areas."
From a Broadband perspective there is almost a monopoly in the UK, the vast number of UK ISPs use Openreach for customer fibre connections rather than building their own fibre infrastructure.
Virgin Media have their own footprint across about 60-70% of the UK population, so for the bulk of people they have a choice of two suppliers, and and collectively altnets aim to achieve a similar coverage in the next few years. I've got a choice of Openreach-ISPs, VM, and Lit, there's some locations that have five physical networks fighting for the same customers.
Would love to know where that 1.5m figure comes from.
The UK networks have 15-20k sites each.
But a lot of those sites are already shared - the overall total is around 50k.
Fears that bills will go up?
That is as true as saying that 'The Sun rises in the East' and 'Donald lies all the time'.
Sorry people, this merger is not about services... it is about the Loadsamoney for the bosses which we , the users pay for.
Re: Fears that bills will go up?
I even heard the suggestion that bills may even go down!!
Oh, how we laughed….
"a detailed rebuttal"
If they had a detailed rebuttal ready then they will be ready to publicly proclaim that their prices will not go up for the next ten years.
Right ?
Yeah, thought so . . .
Re: "a detailed rebuttal"
They quite often do publicly proclaim such things, then about 2 months later, they find "unforeseen circumstances" that mean that regretfully they do have to raise prices.
I'm sure the circumstances were entirely forseen, but it is impossible to prove that.
Sleepdog
UK sleepdog also fears that water is wet.
"Two strong players and two weak players"
Having been a customer of both Vodafone and Three in the past, I can't see a merger improving anything. Two wrongs not making a right, and all that.