Now that the proposed merger of Orange UK and T-Mobile UK has been blessed by the high priests of the European Union and consummation of the affair will shortly be celebrated, thoughts turn to the possibility or even likelihood of yet more consolidation in the British mobile sector. Martyn Warwick forsees a further diminution of competition if (or when) 3 is gobbled-up by Vodafone.
It's the same old story, everything goes along fine for a while and then someone always has to go and put the cat amongst the pigeons. The UK had (and still has - for a month or two anyway) a vital and highly competitive mobile telecoms sector. The main players (the UK's Big Five mobile carriers) have always and loudly protested their espousal of the benefits of competition. They tell the world time and again how competition keeps them virile, agile, on the ball, dedicated to ensuring that the user gets the best deal, (after all, these guys are seriously, seriously customer-centric), how it keeps prices down and services up - but, in their heart of hearts, do they mean it?
Well, I was once at a lengthy dinner with the top bods of various mobile operators from around the world (no names, no pack drill) and as the food, wine, brandy and opulent ambience combined to soften their protective carapaces I was told the truth. They hated competition. It is hard work. It means you are never sure of what's going to happen next. it's worrying, it upsets the order of things. You can't be sure how much profit you are going to make and so on. But it's necessary to pay obeisance to the theory and continuous lip-service to the practice because that's what's expected and required in the brave new world.
Then comes the latest sectoral consolidation: Orange UK and T-Mobile UK. The Big Five are whittled down to the Big Four. But will it stop there? Unlikely. For the remaining mobile operators will be assessing the range of options available to them as they strive to become more competitive in response to the merger. And by "competition" they mean merging themselves.
Yes, the Lobster Quadrille is about to start. UK market leader O2 will be pushed a place down the hierarchy and will do all it can to claw its way back to the top of the greasy pole. Meanwhile, Vodafone will find itself further down the pecking order and will be casting around for some way to bolster its fortunes. And, according to analysts, the way to do this will be to buy or merge with the smallest and most vulnerable of UK's mobile operators, 3.
3 was Britain's first and, for a long time, only genuine 3G service provider. It partly piggy-backs on T-Mobile's network and despite T-Mobile and Orange having given assurances that the deal will not only remain extant when the merger is complete but also will be enhanced, 3 will still be worried.
Furthermore, it is known that, despite Li Ka-Shing's long pockets, 3's parent company has for some time been considering what it might do with 3 UK and the Orange/T-Mobile deal will no doubt focus Hutchison minds even more sharply.
Thus the possibility of acquisition or merger of 3 with another UK brand must be high on the agenda and it's not as if it hasn't happened before - remember that some time ago Vodafone and 3 merged their Australian arms.
And what about O2 in all this? Will the carrier sit quietly by and just watch as the applecart is overturned? No it won't. O2 won't be allowed to merge with Vodafone, the regulators in the UK and in Europe would draw the line at that, but the two could well agree fully to share their networks.
I think what we are witnessing the start of here is a movement towards the foundation of a two-horse race in the UK mobile market with merged or collaborating entities that have control of two huge networks running the sector by themselves and, as a sop to regulators and the market, providing access and services to a variety of MVNOs, some of which we already know and others that haven't been invented yet.
The potential Big Two will facilitate this because it will provide a fig-leaf behind which they can claim to be fostering competition by allowing new players into the mobile space at very affordable prices.
And who will be disadvantaged by the consolidation? In the final analysis it will be the end user - unless the regulators insist on the construction of some insurmountable and impermeable divisions between the Big Two that will actually be managing the networks themselves and the subscriber-facing divisions of those self-same Big Two players.
Will Ofcom have the strength of purpose and stamina to fight the two huge companies that are likely to emerge from all the changes? I doubt it. I reckon it'll be come a matter for the European Commission. In the past under the doughty Viviane Reding, UK mobile subscribers eventually reaped benefits such as the diminution of rip-off mobile roaming charges, but it took a long time.
Ms. Reding's successor still has to prove herself and we all know that the wheels of the Brussels bureaucracy roll very slowly. By the time the EC steps in to referee events in the UK, the Big Two will, more than likely, have driven a coach and horses through the carefully buillt and husbanded competitive landscape and ridden roughshod over the interests of millions of subscribers as they did so.
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