Wednesday, December 17, 2014

Vodafone to Ask U.K. Regulator to Set Conditions for British Telecom

 In the wake of British Telecom’s announcement that it is in exclusive talks to acquire U.K. mobile operator EE from Deutsche Telekom and Orange, Vodafone plans to ask regulator Ofcom to make sure that BT makes its fiber network equally available to all mobile operators that rely on it, according to a report citing a person familiar with the matter. BT’s Openreach unit sells broadband access to mobile operators on a wholesale basis, and according to the source, Vodafone is concerned that if the deal goes through, BT would favor EE’s traffic over that of its rivals when it comes to internet speed. In a statement, Ofcom said that while it is not able to make any decision on transactions, it “may be asked to provide technical advice to the relevant competition authority.”  

The 168-year-old BT has, over the past several years, transformed itself from a declining former state-owned telephone monopoly into a major power in fixed broadband. Its proposed acquisition of EE for US $19.5 billion in cash and BT shares would make it a major player in the converged services market that is rapidly emerging as key in the developed world. Combining EE’s mobile network with the fixed offerings of BT could benefit consumers by lowering prices, but it could also hurt competition due to BT’s unique status as a wholesale broadband provider. Vodafone, the third-largest mobile operator in the U.K. after EE and O2, certainly has reason for concern. If the deal goes through, it is by no means sure that any regulatory entity will take steps to force BT to grant, in effect, net neutrality to all operators that use its fiber broadband network. Whatever the case, though, if BT acquires EE, the pressure will be on Vodafone and O2 to follow suit and find their broadband acquisitions. Already Vodafone is said to be considering a merger with Liberty Global, which conducts cable operations in the U.K. under the Virgin brand.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week or to contact the Tarifica Research department:

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