• MOST READ

• LATEST NEWS

Doubts are rising over the planned merger of the UK's third and fourth cellcos, Orange and T-Mobile. The transaction - which is also a factor in the delay of spectrum auctions - "threatens significantly to affect competition in mobile telecommunications", according to a preliminary review by the country's competition authority.

When it was first proposed, it seemed that the Office of Fair Trading might wave it through, because the country would still have four cellcos (more than many European markets) and because several other territories already have a leading mobile carrier with more than 40% share. However, these are all former incumbents, with their dominant position being eroded, and it seems the authorities will now take a tougher line on actively creating a player with a combined 37% stake. If MVNO Virgin Mobile, which uses T-Mobile's network, is taken into consideration, the market share exceeds 40% by subscribers. The new entity would also burst UK spectrum caps, holding twice as much bandwidth as Vodafone and O2, and more than five times as much as 3.

The OFT now wants to carry out a full scale investigation into possible detrimental impact on competition in the mobile sector, under pressure from consumer groups. The OFT is also concerned about the effects on the smallest of the UK's 3G network owners, 3 UK, which would struggle if its RAN sharing deal with T-Mobile UK, MVNL, were to be ended as a result of the Orange merger. (This venture has outsourced operations to Ericsson.) 3 UK CEO Kevin Russell recently said any exit would not be triggered quickly, but he expressed concern that the new entity would have over 80MHz of spectrum, given that capacity will be a crucial advantage in the data-hungry networks of HSPA+ and LTE.

3 has been putting significant efforts into improving the quality of experience - the cellcos' new key metric - of its network, which started life with 7,000 cell sites in 2003, and should reach 12,855 by the end of this year, all supporting 7.2Mbps HSPA with better indoor penetration. UK CTO Graham Baxter says the cellco carries 75Tb of data per day, up 100% in just a year, and with dongles carrying 7.5 times the data traffic of its smartphones (3 has been a major trailblazer in well priced dongles, but its network is bearing the brunt of that).

All these efforts could be put at risk by the TMo-Orange merger, especially if the merged carrier does not have to divest any spectrum. Opponents of the merger have written formally to the EU's Competition Commissioner, Neelie Kroes, requesting that any investigation should be under the auspices of the UK rather than the European Union. A probe would normally be an EU responsibility because more than 66% of the turnovers of T-Mobile's and Orange's parents come from outside the UK. However, consumer lobbyists argue the effects would only be felt by UK users.

Pages: 1 | 2

Related Stories

COMMENTS

No comments yet. Be the first to add a comment!

Digital Money: The Convergence of Contactless Card and Mobile Payments

This report examines the emergence of digital money from the perspective of the convergence of card-based proximity payments to the...

Cloudbooks: Market Analysis and Forecasts
This report is based on interviews with device OEMs, retailers and resellers and provides a comprehensive analysis of the new cloudbook...