Mobile market review: summary

1
Mobile market review summary

• The market is not yet effectively competitive but
  competitive pressures are growing
• intend to remove Market Influence obligations
  from Vodafone BT Cellnet
• but SMP designations to remain on both
• no change (in addition to call termination) in
  formal regulation of Orange and One2One

2
The good news

• prices are among the cheapest in Europe
• evidence of long-term trend of falling prices
• high consumer satisfaction
• competition on quality evident
• expected increase in competition
• continued competition between existing 4
• entry of Hutchison 3G as 5th operator
• likely countervailing power from providers of
  content mobile Internet services

3
So obligations relaxed

• Formal consultation on MI removal Oct 01
• current undue focus on regulated ISP model
• reasonable demands of service providers can be
  met by the market
• but if the market does not deliver, MI can be
  re-triggered as relevant licence conditions
  retained
• also note no change in policy on MVNOs not
  mandated

4
But market power remains

• Vodafone and Cellnet pricing above the
  competitive level
• Vodafone profits persistently/significantly
  exceed cost of capital, with no major change
  expected in next 2 years
• BT Cellnets prices also clearly above Oranges
• so SMP obligations (including IA) continue

5
Other Oftel concerns

• high prices for some call types
• off-net/on-net price differences probably
  inefficient
• international roaming wholesale market
  consumer awareness problems
• consumer awareness
• poor advice, and awareness lagging penetration
• excessive switching barriers
• MNP full benefits yet to be realised
• SIM-locking switching and equity concerns

6
How to tackle concerns ?

• off-net new call termination cap, rather than
  addressing at retail level
• international roaming supply-side work with
  other NRAs/Commission
• MNP continued pressure/monitoring
• SIM-locking co-regulation to remove it or reduce
  its impact
• promote increased consumer awareness, focusing
  on point of sale

7
Further information

• Next mobile market review to be conducted
  following introduction of new European Directives
• Contact for further questions/information
• Nic Green 020 7634 8891