Ofcom boss openly favours four operator market

In a speech Ofcom boss Sharon White has made it clear that her preference is for the UK to have four mobile network operators, which indicates she is not in favour of the O2/Three merger.

The theme of White’s speech was ‘Consumers and consolidation and in a section headed ‘Risks to competition from consolidation’ she addressed the underlying telecoms trend towards multiplay and the accompanying wave of consolidation. White made it clear that Ofcom has highlighted potential issues concerning the BT/EE deal, specifically that BT “…may have an incentive to favour EE over other mobile operators in providing network services.”

Moving on to the O2/Three merger, White stressed that this would result in a reduction in the number of UK MNOs from four to three. In weighing up the pros and cons of consolidation White concludes that consolidation only serves the public good when operators are unable to adequately invest without it, a situation she does not see in the UK, with operators maintaining healthy cashflow margins.

“We continue to believe that four operators is a competitive number that has delivered good results for consumers and sustainable returns for companies,” said White.

“I want to end by emphasising that this is a key moment for the communications market. The scale of change in the next twelve months and beyond could dwarf what we have seen over the last ten years. If the current merger wave continues, there are risks to consumers and businesses who have enjoyed one of the most competitive markets of recent years.”

Ofcom does not have the casting vote on the O2/Three merger, nor even does the UK Competition and Markets Authority, much to its apparent annoyance, but both seem to be sending string signals to the European Commission that it should block the move on competitive grounds.