Ofcom sees no major regulatory problems with BT acquisition of EE

Retail mobile – Ofcom is happy with the current state of competition between four major MNOs. It notes that BT has its own 2.6 GHz spectrum, but also that it will struggle to commercialise it without its own national network. In summary BT is not currently a significant enough mobile player that its merger with EE would create competition concerns.

Wholesale mobile – From the report: “The merger may reduce the incentive for the merged entity to supply wholesale mobile services to fixed/mobile bundle MVNOs, as the impact of retail bundle customers substituting to the MVNO may be greater than it would be absent the merger. However, we note that MNOs already take account of a potential substitution effect when entering MVNO supply agreements.” In other words, no significant change.

Mobile backhaul – From the report: “We recognise that, as a vertically integrated firm, BT may have the incentive to discriminate in favour of its downstream divisions, and we impose regulation to address such concerns. We believe the current and future proposed regulation that we apply to BT will limit BT’s ability to discriminate over price, quality and innovation in the provision of leased lines.”

Fixed broadband – From the report: “It is difficult to be certain about the extent to which the BT/EE merger will increase the complexity of the current regulation. That said, Ofcom has extensive experience in cost modelling and applying regulation in complex environments. Therefore, we do not anticipate that any added complexity arising out of the merger would make our VULA margin regulation unworkable.”