Cable.co.uk comments on controversial CMA ruling in favour of BT-EE merger
- BT-EE merger receives final go-ahead as of 7am this morning, following preliminary findings published on 30 October 2015
- Wider industry has persistently raised strong objections to the merger, pointing to a substantial lessening of competition (SLC) that will ultimately have a negative impact on consumers
- CMA claims assessment has been "complex, detailed and rigorous" and say it has "considered all responses" from the wider industry
15 January 2016: Just moments ago (7am GMT), the Competition and Markets Authority (CMA) announced its final clearance of the merger between EE and BT – the UK's largest fixed line network provider, and the UK's largest mobile network provider.
The ruling, though expected, arrives in the face of a range of strong objections from around the UK telecoms industry, with the likes of Sky, TalkTalk, O2, Vodafone, Virgin Media and a dozen more having responded to the provisional findings in October last year with similar complaints, including:
That such a merger will have a negative impact on competition in the UK telecoms marketplace
That it will provide BT EE with an unequal and unfair percentage ownership of the UK's 3G and 4G mobile spectrum
That it imbues BT EE too much power to moderate the wholesaling of network capacity to MVNOs (Mobile Virtual Network Operators such as Virgin Mobile who rely on EE's infrastructure)
Dan Howdle, telecoms expert at consumer mobile and broadband advice site, Cable.co.uk had this to say about the announcement: "There can be no doubt as to the power over the UK consumer telecoms market BT EE now wields. Which is precisely why the wider industry has persistently urged the CMA not to rush ahead with this decision, but to take into consideration, and to fully explore their commonly held objections.
"Sky, for example has been at pains to point out that not only are there – in its opinion – "fundamental flaws" in the economic analysis performed by the CMA, but that the CMA itself contains dissenting members who appear to share the view that the merger will prove a disaster for UK telecoms, and in turn for consumers.
The CMA believes the new merged company is, by default, financially incentivised to continue to supply wholesale services to other providers (Virgin Mobile, for example runs on the EE Network), which will prevent it from closing its doors to third-party operators in an attempt to monopolise its own network infrastructure.
“The greatest concern for its competitors, then, is that, though unlikely – as the CMA points out – no firm measure has been put in place to actively prevent it.
“The only number that truly accomplishes all of that is the total cost of the contract from start to end (or at the very least the first-year cost including all one-offs and extras). The ASA’s recommendations stop short of enforcing complete transparency in this regard.
"Acknowledging there’s a problem is half the battle – so half the battle has indeed been won today – but complete consumer understanding of broadband contract cost from billboard to checkout is still, it would appear, some way off."
Notes to editors
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Dan Howdle has been plugged into the attitudes of UK broadband, TV and mobile customers for over two decades, running research fieldwork both nationally and internationally on behalf of the biggest players in the industry. Dan is now consumer telecoms analyst at Cable, as well as more formally operating in the role of its Director of Communications and Content.
An experienced broadcaster, commentator and writer, Dan has appeared on BBC TV and radio, ITV, Sky and in the national papers. Dan has advised Ofcom on issues surrounding service quality, administered Cable’s Broadband Service Quality Awards and sat on the panel of judges for the Internet Service Providers Association annual awards.