Competition assessment of future mobile markets

During the last couple of years there has been a substantial increase in the use of mobile data services and that increase is expected to continue. The importance of data services including mobile broadband has been recognized by the Government. The Government has issued Direction to Ofcom to guarantee the release of additional spectrum for the use of next generation wireless mobile broadband providers, its early deployment, to maximize coverage of those services and to create greater investment assurance for operators.

According to Section 3 of the Communications Act and Article 8 of the Framework Directive, Ofcom’s primary duty is to promote the interests of people in respect of communications matters, and the interests of customers in pertinent markets where suitable by upholding competition.

Ofcom is required by the Direction to assess the probable competition in markets in future for electronic mobile communications services. This assessment must be in respect of the competitiveness of those markets in future once the Auction process is over, taking into consideration the likely effects of the Award. The assessment should also take into consideration the possibility for new entry into the markets.

The Direction requires that basing on the assessment; Ofcom should implement proportionate and appropriate measures which it thinks fit, including rules that govern the award, with the aim of promoting competition in those markets after the close of the award.

Competition assessment: future national wholesale competition.
As laid out in previous Consultations, March 2011 and January 2012, Ofcom distinguish between three types of competitors who provide mobile services and the regulator use the following terminology or jargon to describe those types: National wholesaler, Sub-National Radio access Network (RAN) operator, and Other Retailers.

Ofcom foresee that all the three types of competitor would continue to operate in the retail market in the future also.

Here Ofcom use the terminology “National Wholesaler” to denote the companies that control wholesale access to national RANs. Ofcom uses this term ‘National Wholesaler’ rather than the more widely used term “Mobile Network Operator” (MNO) because owners of sub-national RANs are also network operators although on much smaller scale. Not only that National Wholesalers could share or contract for access to national RANs and still be in a position of controlling wholesale but not operating the network.

National wholesalers supply access to their RANs to their own downstream retail operations and a variety of other downstream retail operations, including “mobile virtual network operators” (MVNOs), and operators of smaller sub-national RANs. In this context, parties who are already supplying third parties in a wholesale market and those who have the capacity to do so but do not and supply only to their own retail operation are included in ‘National Wholesalers’. Operators who engage in RAN sharing but maintain independence as a wholesaler on a national basis are also included in ‘National Wholesaler’ terminology. As per the above characterization there are four national wholesalers in the UK at present and they are Everything Everywhere, Telefonica, Vodofone and H3G.

The term ‘Fourth National Wholesaler’ is used in the competition assessment by Ofcom is to denote an existing or potential new national wholesaler other than the three current largest wholesalers namely Telefonica, Vodafone and Everything Everywhere.

The term ‘sub-national RAN operators’ is used by Ofcom to refer the operators who own RANs but who are not national wholesalers. They operate only in a limited part of the UK. In this section Ofcom identifies potential competitors of this type who have access to certain sites (typically indoors) and operate some low-power radio access equipment.

Likewise, any competitor who provides mobile services to consumers but is not a national wholesaler or a sub-national RAN operator is termed as ‘Other retailer” by Ofcom. MVNOs (Mobile Virtual National Operator) are the main category of these competitors. By buying network services from a National Wholesaler, these retailers compete. National Wholesalers agree to supply the mobile services used by the retailer’s customers. All other functions like signing up customers, billing etc would be managed by the retailer.

Comments are closed.