Ofcom Happy With Mobile Competition… For Now

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Ofcom says four operator model is sustainable but is looking at how mergers and convergence will change market

Ofcom is happy with the quality of service and competition in the mobile market, but says it will take a keen eye on the pending mergers and trend towards convergence taking place in the sector.

Phase One of the regulator’s once-in-a-decade review of the UK communications market has paid less attention to competition in mobile than fixed, with Ofcom says the quality and affordability of services available to consumers and businesses is evidence the current four-operator market is working.

Whereas Openreach is heavily regulated to ensure BT’s rivals have wholesale access to its fixed network, Ofcom sees no need at present to intervene in mobile. It says ‘end to end’ competition where operators control network infrastructure, service and retail is delivering results.

Ofcom competition

businessman mobile“We certainly believe end to end competition is important and delivers more enduring competition than intervening higher up,” Brian Potterill, competition policy director at Ofcom told a Westminster eForum. “We’ve got very rapid 4G rollout with all mobile operators competing to deliver better coverage than each other.”

He added that the fact the four companies were generating in excess of £10 billion in revenues justified Ofcom’s regulatory stance that spectrum should be reserved for a fourth player in the 2013 4G auction and that the current model is sustainable.

Particular praise was given to Three, effectively the fourth operator and newest entrant to the market, which Potterill said had done a lot to drive competition while making a loss for many years, but had generated cash for the past three years.

Future challenges

Roaming is one area Ofcom believes competition has had a hugely positive impact for consumers as operators slash costs and Three abolishing some charges entirely. Ofcom said future reductions were dependent on European regulations as UK customers virtually the same price operators are being charged by foreign networks.

“In the UK, we benefit greatly from competition at a retail level and roaming is very much part of that,” said Potterill.

But of course the O2-Three merger and BT’s proposed takeover of EE, combined with a wider trend towards ‘quad-play’ packages of landline, mobile, broadband and television services could challenge this current arrangement.

“Ofcom doesn’t have direct role [in regulating the transactions] but we work closely with Competition and Market Authority (CMA) and the European Commission (EC),” explained Potterill, adding that consolidation was taking place in Europe. “This has got regulators across Europe thinking about how they’ll regulate in the future.”

He suggested there could be a shift towards ‘oligopoly’ regulation in the future, adding there is a “middle ground” between perfect competition and utter dominance.

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