Overview of Ofcom’s approach to analyzing its concerns

For considering the two potential competition concerns that Ofcom has identified, the approach followed by the regulator is stated below.

The approach has four steps

1) Ofcom considered possible be Auction outcomes i.e. distribution of spectrum holdings subsequent to the Auction and the competition concern that might creep up in the absence of measures in the Auction to promote competition.

2) Ofcom also considered the likelihood of those outcomes that would arise as a result of bidder’s behaviour in the Auction in the absence of any measures in the Auction to promote competition.

3) To set out its views on competition concerns, Ofcom brought together the analysis in step 1 and step 2. For doing this Ofcom has considered the magnitude of the detriment to consumers of an Auction outcome, the likelihood of the technical and market conditions arising for the detriment to occur, and the likelihood that the national wholesaler in question would be unsuccessful to get hold of the necessary spectrum in the Auction to avoid the outcome.

4) Ofcom has also considered what measures it should take to address its concerns and set out its conclusions about a proportionate and appropriate approach. The regulator also considered the implications of its measures on other national wholesalers and their chances to obtain any spectrum they may need to enable them to become credible.

To capture a particular set of conditions that might make up a future scenario for the provision of mobile services, Ofcom uses the phrase ‘technical and market conditions’. Such a scenario will be affected by technical conditions. It will also be affected by the prevailing market conditions. The market conditions will reflect how consumers value different attributes of mobile services in the future.

A wide range of evidence was considered by Ofcom in undertaking its competition assessment since that assessment is about the future competition in the provision of mobile services. In particular Ofcom considered technical research on evolution of the standards for mobile technologies LTE and HSPA, technical modelling of the capabilities of macrocell LTE networks, technical research on the availability of future mobile handsets, consumer survey evidence on mobile consumer’s behaviour, research on the potential use of small cells and evidence from the experience in other countries on outcomes of similar auctions and spectrum holdings amongst competitors.

It is admitted that this evidence is not conclusive and it needs careful interpretation. This is so because, for example, the analysis of the technical modelling always have some inherent limitations, researches may be conditioned either by the current position or by current expectations and in some other cases, such as the availability of handsets, decisions of national wholesalers are likely to have an important influence on future happenings. However, despite these limitations, this evidence helps the regulator to make more informed judgements in its competition assessment.

Comments are closed.