Two-thirds in favour of greater MNO consolidation
Almost two thirds of the industry believes that greater consolidation is needed among mobile operators, with support emerging for the concept of single network markets, according to the latest research from Telecoms.com Intelligence.
The Telecoms.com Intelligence Industry Survey 2013, which will be published on February 18th, collected data from almost 2,000 industry respondents, including 600 operator employees from 260 different operators worldwide.
One of the headline statistics from the report was that 64.6 per cent of respondents believe that further consolidation is needed in the mobile operator community. In line with this, when asked to rate a number of priorities for national telecoms regulators, respondents marked maintaining the number of mobile networks in the market as the least important. Less than ten per cent of respondents felt that this should be regualtors’ highest priority.
UK regulator Ofcom, whose 4G spectrum auction begins this week, made clear its intentions to guarantee the presence of at least four LTE operators in the UK market when it set out its plans last year. Only one of the LTE licences being made available by Ofcom carries a coverage requirement designed to improve services in rural areas.
Respondents to our survey felt that improving coverage in rural and unconnected areas ought to be the second highest priority for regulators, behind maximising the potential of available spectrum.
They were split on the ideal number of separately owned and operated national mobile networks that their home market will be able to sustain in two years’ time. The largest share, 40.2 per cent, felt that three would be the maximum, while 29.4 per cent felt four were sustainable. Just over 17 per cent believe that their market will be able to support five or more.
But there is a swell of opinion in favour of the notion that individual markets only need one physical network, with operators competing at the service layer. While just over 44 per cent of respondents felt that this model is not commercially viable, 35.7 per cent—more than one third of respondents—felt that it is.
When the 20 per cent of respondents who were undecided are taken into account, respondents who came out against the viability of the single-network market found themselves in the minority.
To register to receive your free copy of the full report from the Telecoms.com Intelligence 2013 Industry Survey when it is released on February 18th, click here.
No wonder that the “industry” would favor even less competition. However as, our EU27 smartphone tariff competitiveness report showed, this would clearly lead to higher prices for the end consumers and slower mobile internet adoption.
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Fortunately for us citizen/consumers (as Ofcom likes to call us) the regulator isn’t there solely for the benefit of industry participants. Isn’t this a bit economics 101 – Ask any firm what they would want and it would be less competition. The reality is that the mobile industry enjoys fabulously high barriers to entry (in particular through licenced spectrum) and most industries would love to directly compete with only 3 or 4 other firms
I’m not sure I read this as operators simply saying they would prefer fewer competitors, although that may well be true. Operators themselves accounted for only one third of respondents—and I don’t think the supply side (which made up the majority of the remainder) benefits from having fewer companies to sell to. What I do think comes through is the message that many markets, particulary those enduring the worst times economically, are going to struggle to support as many operators as they have historically. Partly because there are very high costs associated not just with entry but also wtih ongoing participation. You can see the same concerns in the high level of enthusiasm for network sharing in LTE. Almost two thirds of respondents felt it “essential” to profitability. There is clearly a tension between sutainability of the operator market and a regulatory drive to maintain what are perceived to be necessary levels of competition. But whether or not the number of separately owned and operated networks needs to be kept at historical levels in order to achieve competition is certainly being debated at the moment.