Sky: BT-EE Merger Will Damage Hybrid Network Development

BroadbandNetworks
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Sky tells CMA it fears acquisition will give BT too much control over UK communications and allow it to take an unfair lead in fixed-mobile convergence

Sky has warned that BT’s pending £12.5 billion takeover of EE risks destroying competition in the broadband and mobile markets, especially with regards to emerging hybrid network technology, unless regulation is amended to ensure a level playing field.

In its submission to the Competition and Markets Authority (CMA) investigation into the transaction, Sky joined TalkTalk in its opposition, claiming a joint BT-EE would have control over three “essential inputs” for hybrid infrastructure – backhaul, spectrum and local exchanges.

“The provision of the key wholesale inputs required for hybrid networks services is not currently regulated in a clear and comprehensive way,” said Sky, which noted that although backhaul services on a macro level are regulated by Ofcom, there are no rules governing other infrastructure, like small cells, which may require access to the Openreach local network.

Sky opposition

Sky logoSky said that even proposals enabling access to dark fibre would have no impact until 2017, by which time BT could have secured a key ‘first mover’ advantage as the merged company would have unmatched advantages through the combination of the UK’s largest fibre and LTE networks.

TalkTalk’s concerns about a lack of competition in the Mobile Virtual Network Operator (MVNO) and backhaul markets were also echoed, while Sky also expressed fears that BT would neglect investment in its copper infrastructure in favour of fibre and LTE projects that would benefit its retail businesses.

“The merger will strengthen the existing ability of both BT and EE to engage in anti-competitive manipulation of rivals’ costs and quality of service, as the merged entity will combine control of several key upstream infrastructure assets,” added Sky.

BT has said its vision of converged network infrastructure can help deliver next generation business applications and envisages a time when there is no distinction between mobile and fixed connectivity.

Even if the EE deal is granted regulatory approval, BT plans to go ahead with the creation of a hybrid ‘inside-out’ model, comprising its MVNO and BT Wi-Fi network. This, it claims, will reduce demands on cellular networks and improve indoor coverage in offices which can be difficult to penetrate.

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