back to article CK Hutchison/O2: 'Four networks' dogma risks one giant and three hopeless dwarves

Three parent CK Hutchison is so keen to get its merger of O2 approved by Brussels, it’s willing to give up infrastructure and spectrum that a new entrant could use to create a fourth network. Brussels (and Ofcom) remain dead set on the UK having four major networks, rather than regulations that beef up competition from Virgin …

  1. Anonymous Coward
    Anonymous Coward

    Seems to me...

    that the best way to shake up the market is to separate the delivery infrastructure from the service providers, reducing cost of duplicated towers and associated environmental issues, and turning them into carriers over a couple of centralised providers.

    At the moment the position is very complex with brands either owning or selling the access.

    1. A Non e-mouse Silver badge

      Re: Seems to me...

      It's almost like that now. O2 & Vodafone have a merged infrastructure under the Cornerstone/Beacon initative. (Something which is complicating the O2/Three merger) I think they outsource this to Aquiva.

      1. Anonymous Coward
        Anonymous Coward

        Re: Seems to me... Aquiva

        Point taken, speeliong correction needed: Arqiva

        http://www.arqiva.com/about-us/at-a-glance.html

        *Exactly* what's outsourced to Arqiva (masts? masts and backhaul?) is unclear to me right now. Quantity and location of masts are important to coverage. Quantity of backhaul is important to speeds.

        Personally as a dual-SIM customer of both O2 and of EE, neither have much coverage to write home about on the journey between Birmingham and Chester which I have been doing frequently for the last couple of years. And that's for GSM, PCN, and 3G (4G? What that?).. Far too many "no signal" areas.

    2. Tim Russell
      FAIL

      Re: Seems to me...

      You mean like the DSL market, let one company deliver the copper connectivity and the others deliver services... yep that's worked out well!

      ....or maybe you mean like one company operating the rails and another the trains, another prime example!

      I'm sorry but the Utopian idea is good, realism tells us it will fail.

  2. A Non e-mouse Silver badge
    Meh

    So....Three can't survive on their own in the UK mobile arena, but they think someone using cast-offs of 3's infrastructure can.

    1. Roland6 Silver badge

      Three aren't casting off infrastructure, they are simply offering to reserve capacity ie. bandwidth NOT spectrum, for MVNO's.

  3. Richard Jones 1
    FAIL

    What is Coverage

    As a customer of 'Nothing Much Anywhere', I would like to know what 'network coverage' is as a concept these days.

    In the days of T Mobile and its forerunner I did have home coverage but now...........ooh one bar no its gone again.

    Vodafone was not a whole heap better.

    1. Jimmy2Cows
      Unhappy

      Re: What is Coverage

      At least myself and SWMBO aren't the only ones who felt that coverage really went to shit after Orange and T Mobile merged.

      Of course it sucked pretty badly before that, but we (foolishly?) hoped the merger would lead to better coverage, not worse. Or at least that it would stay the same. Trouble is none of the other operators, real or virtual, seem to be any better.

  4. DaddyHoggy

    Coverage?

    I've hung on to my v. cheap "All you can eat Data" from Three, for just £13 a month, by ignoring all their offers to upgrade the bloody awful Galaxy Ace they gave me 3+ years ago (I bought myself a SIM-Free S3 mini for under a £100 a couple of years ago as the Ace was so dreadful).

    Of course Three can offer AYCED because I get absolutely minimal 3G coverage and despite promising better 3G coverage at home/at work/on drive to work/where I go on holiday - they consistently fail to provide any signal improvement anywhere.

    1. Ian Emery Silver badge

      Never give up hope

      After 5 years of getting 0.02Mbps on my local (LOS) O2 mast, my complaints were finally listened to (I wrote to the CEO), and now I get an average 1.29Mbps.

      My wife has even detected signs of 4G on her phone, despite the nearest 4G transmitter supposedly being 10 miles away.

  5. Drefsab_UK

    hmm three have been great for me, im also on one of the all you can eat data plans (I dont give a damn about calls and texts). Sim only 30 day for £12 per month, and I will damned well keep it because theres no other decent option on the whole mobile market. My speeds are great almost always have signal and often download a lot (spotify/play store content/netflix) etc.

    My work phone (crappy iphone 6s, sorry just cant love ios) is on EE, again I dont have to worry about the bill/caps but its always suffering lack of signal and issues. If I was paying for EE id have cancelled them a log time ago.

    As has been said before coverage is the biggest issue people are having. Personally if three and OS were to state they would look at deduplicating mast's expanding capacity on existing masts then using all that extra kit they could commit to filling in and expanding coverage. The biggest problem people have is coverage followed by network speeds, if they seriously take steps to solve those two issues they should be given the green light.

  6. Philippe

    4 network providers isn't dogmatic

    So far we have 4 examples. Ireland, Germany and Austria in all three markets going from 4 to 3 provider led to higher prices. Austria being the worst example.d

    If you look at France which went the other way (i.e from 3 to 4 networks) prices have collapse with the entrance of a fourth player.

    There is nothing dogmatic about wanting 4 networks in a given country. It doesn't matter what the size of the various provider is. Orange in France was just as big as EE in the UK and still the prices collapsed.

    That thing about MVNO providing alternative and competition doesn't mean anything. Hardly anyone ever heard of iD,

    What people want is a named network and and low prices. You don't get that with just three networks.

    1. Jimmy2Cows
      Holmes

      Re: 4 network providers isn't dogmatic

      Hmm... seems (to my uneducated mind) that you're describing how reducing the number of players leads to price hikes, while increasing the number of players is better for the consumer.

      That, indeed, is not dogmatic.

      What is dogmatic is insisting that 4 is somehow a magic number for how many mobile operators a country needs.

      The fact that "4" was involved in each of your examples is coincidental at best, and does not prove your titular assertion.

    2. Roland6 Silver badge

      Re: 4 network providers isn't dogmatic

      If you look at France which went the other way (i.e from 3 to 4 networks) prices have collapse with the entrance of a fourth player.

      And is in the process of performing a u-turn and becoming 3 again; subject to EU regulatory approval...

    3. Roland6 Silver badge

      Re: 4 network providers isn't dogmatic

      "So far we have 4 examples. Ireland, Germany and Austria in all three markets going from 4 to 3 provider led to higher prices."

      Did the reduction from 4 to 3 cause the higher prices or was it something else such as network capacity ie. spectrum constrained and hence capacity constrained, combined with increasing levels of data consumption mean the networks no longer need or want to attract large numbers of new users.

  7. Missing Semicolon Silver badge
    Unhappy

    I like the "promises"

    Once again, a big company says "if you let us cut costs, we'll boost investment"". However, without the competitive pressure, the saved money goes to sharehoders and execs. When EE and TMob merged, once the network had been rationalised, the coverage was actually worse than before. We already have insufficient pressure to improve coverage, so reducing the number of operators will not help.

  8. Commswonk Silver badge

    Have I missed something?

    And there’s a lot to be said for stimulating competition by beefing up MVNOs, rather than dogmatically insisting on four networks. Nimbler virtual operators are better placed to pass on cost savings than major networks, and can leverage their existing footprint and other marketing channels.

    Of course the MVNOs are "nimble"; they don't have to find either the capital to invest in infrastructure or the revenue to fund all the planning that goes into network expansion. In one sense they parasitise upon the actual network operators. Furthermore if cost savings are passed on to end users then where is any money for network development to come from?

    Britain’s problem isn’t that prices are too high, it’s the spotty coverage, a sign of weak investment.

    Well there's a surprise! If competitive pressures reduce network operators' income then "weak investment" - evidenced by "spotty coverage" - is bound to follow just as night follows day. The growth in the user base must have flattened out by now, although users may well be taking out more expensive contracts for data services but that slowing of income growth (irrespective of competitive pressures) will mean that there simply isn't the cash to fund filling the gaps; if filling a gap generated a corresponding growth in usage and thus income then all well and good, but if it doesn't then the gap filling exercise is simply a financial burden on the network operator.

    I simply cannot see how wanting "cheap" services and better coverage can both be achieved at the same time. If there was a regulator called "OFCAR" who demanded "Rolls Royce standard" cars should be available at Mini prices we'd all laugh our heads off.

    1. Roland6 Silver badge

      Re: Have I missed something?

      Three are several steps ahead of Ofcom and the EU here...

      Given how much of the mobile network infrastructure is now shared between the current four operators, the only real difference between a MNO and MVNO is their investment in the joint ventures.

      Hence I think Three with their proposals to allow MVNO's to grow to a point where they can also consider becoming direct investors in the joint venture; something I suspect Sky, Virgin and TalkTalk might find attractive are ahead of the game. Because we all know deploying 4G, 5G and more spectrum won't be cheap...

      1. YorksinOaks

        Re: Have I missed something?

        In a typical auction, there is enough spectrum for 3 operators but not enough for 4. When there were 5 - engineered by OfCom - it was carnage, which you may remember as killing 3G before it was born with a £24Bn debt. So with excess demand, prices go up, and most operators are not happy with what they got.

        But hey, OfCom got their bonus and G.O. gets his lump sum at the treasury.

        3 operators mean a bit of competition but the auction is quickly over. The Operators have money to invest in Network Infrastructure and consumers are happy. But OfCom will have to cry in their beer and they seem not to be happy with this.

        1. Roland6 Silver badge

          Re: Have I missed something?

          But hey, OfCom got their bonus and G.O. gets his lump sum at the treasury.

          It was Gordon Brown who got a lump sum at the treasury from the 3G spectrum auctions, although as the successful bidders could opt to pay 50% upfront and the remainder in installments...

          Interestingly, we shouldn't forget these were 20 year licences and hence Ofcom are probably beginning to think about how it is going to handle this auction in 2019/20, when the established operators may have little interest in bidding against each other...

          1. YorksinOaks

            Re: Have I missed something?

            "Ofcom are probably beginning to think about how it is going to handle this auction in 2019/20, when the established operators may have little interest in bidding against each other..."

            Precisely. They are concerned that 3.5GHz and DD2 auction proceeds will be a bit light.

            We should also recall that 20% corporation tax was lost on most of the 3G license proceeds as they were massively written down with the associated tax write-off when those losses were declared. As well as the slow deployment of 3G and knock on delay of 4G so that 3G RoI could be maximised. So short term ('OfCom') gain must be balanced against lost revenue, lost investments and lost taxation.

            1. crayon

              Re: Have I missed something?

              "We should also recall that 20% corporation tax was lost on most of the 3G license proceeds as they were massively written down with the associated tax write-off when those losses were declared. ... So short term ('OfCom') gain must be balanced against lost revenue, lost investments and lost taxation."

              If company A spent £10 billion on spectrum the government pockets the £10 billion. If company A didn't spend the £10 billion on spectrum (or anything else) and declared it as profit then they would have to pay the 20% corporation tax (assuming that's the going rate) and the government gets £200 million. So where is the lost taxation?

    2. Anonymous Coward
      Anonymous Coward

      Re: Have I missed something?

      "I simply cannot see how wanting "cheap" services and better coverage can both be achieved at the same time"

      That's OK.

      Incidentally, have you noticed that in recent years there's been a UK regulatory commitment for a minimum level of broadband service across almost all the UK? A "universal service obligation", aka USO.

      A bit of joined up thinking might have considered having that USO delivered over cellular networks as well as just over BT copper (and, in a few places, satellite), thereby improving both broadband coverage and mobile coverage.

      But no, our elders and betters don't allow joined up thinking.

      Not even when the same regulator is in charge of mobile coverage and broadband coverage.

      There's a word for these people.

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