Business Watch: 2010 issues

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Orange/T-Mobile JV
It’s set the be the battle that characterises the mobile industry in 2010. It’s the regulatory wrangle over whether Orange and T-Mobile should be allowed to merge their UK networks without having to give up valuable spectrum.

Other networks are worried about the implications of the deal and have called for the proposed team-up to be probed by UK regulators rather than European Commission (EC).

Orange’s parent France Telecom and T-Mobile’s parent Deutsche Telekom want Brussels to investigate the merger, reportedly because it could come to a conclusion faster than the UK watchdogs.

But O2 and 3 have told The Financial Times that UK competition authorities are better placed to look at the joint venture. Vodafone too believes that the UK authorities are keen to scrutinise the merger.

In a recent report on the state of the market, Ofcom said consumers were currently being well served thanks to competition between the five carriers, but that the situation could change if the merger gets the nod.

“The proposed merger between T-Mobile and Orange may well have significant implications for the conclusions set out in this document and for our future work programme,” it said, in classic regulatory-speak.

While it might seem all-powerful to many people, Ofcom doesn’t actually have direct powers to approve mergers. These are instead ruled upon by the Office of Fair Trading unless they meet criteria to be assessed by the EC.

But Ofcom expects to provide input to whichever authority investigates – and it’s pretty clear it has reservations. It’s now up to the EC to decide whether it will scrutinise the deal or refer it back to London.

The merger would create Britain’s largest mobile operator and shrink the UK from a five to a four-player market. But the chief concern of other networks – who would probably be happy to see competition come out of the market – is the joint venture would hold the lion’s share of 1800 MHz frequency.

O2 UK chief Ronan Dunne says the joint venture should give up some of that spectrum because it’s well suited for 4G. 3 UK boss Kevin Russell also told The Financial Times  that “a concentration of 1800 MHz spectrum in the hands of one entity will distort the development of a competitive mobile broadband market in the short- and medium-term”.

Full article in Mobile News issue 455 (January 18, 2010).

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