Vodafone Said to Ask Watchdog to Keep BT in Check
Post# of 17650
Posted On: 12/22/2014 11:48:08 AM
Vodafone Said to Ask Watchdog to Keep BT in Check After Deal
Vodafone Group Plc (VOD) plans to ask U.K. regulators to set conditions for BT Group Plc (BT/A)’s proposed acquisition of EE for almost $20 billion to ensure the former phone monopoly won’t discriminate against rivals, according to a person familiar with the matter.
Vodafone will ask telecommunications regulator Ofcom to guarantee that U.K. wireless carriers, which rely on BT’s fiber network to transmit voice and data traffic across the country, are treated fairly when BT sets prices and connects their broadcasting towers, said the person, who asked not to be identified because the deliberations are confidential.
BT said yesterday it’s in exclusive talks to buy EE, which is jointly owned by Deutsche Telekom AG (DTE) and Orange SA. (ORA) Such an acquisition would give the former phone monopoly an incentive to favor its own traffic, which could result in unfair speed advantages, the person said.
BT combined with EE may also be required to divest excess wireless frequencies, according to the person.
Dan Thomas, a spokesman for London-based BT, said the company’s Openreach unit is already separated from the parent company as it transports traffic for other carriers. The division is regulated by Ofcom and provides fair access to rivals, he said.
A spokesman for Newbury, England-based Vodafone declined to comment.
‘Market Power’
Formerly known as British Telecom, BT dominated the U.K. phone-service market for most of last century as a government-owned monopoly. It was privatized under Margaret Thatcher in the 1980s and spun off its mobile-phone division in 2001.
Now the company is set to make a comeback to wireless services at a time when TV, landline and mobile offerings are converging as consumers increasingly watch video and access the Web on multiple devices.
Regulators are set to examine the deal because of BT’s potential to exploit its market power in fixed-line services, said Emanuela Lecchi, a lawyer at Watson, Farley & Williams LLP in London. “The main issue will be some sort of conglomerate issue, the fact that BT could theoretically leverage its position in fixed, for example, to bundle fixed and mobile, to the detriment of mobile operators.”
Ofcom declined to comment on the deal. The agency said in an e-mailed statement that while it has no power to decide on transactions, it “may be asked to provide technical advice to the relevant competition authority.” Representatives of the European Commission and the U.K.’s Competition and Markets Authority, which conduct antitrust reviews, declined to comment.
Openreach Criticism
Most of the other operators use BT’s Openreach network: Vodafone, TalkTalk Telecom Group Plc (TALK), EE and Hutchison Whampoa Ltd. (13)’s Three all buy regulated wholesale access to the infrastructure to resell to customers.
The carriers that rely on Openreach have already expressed frustration with the way the network is run. The U.K. Competitive Telecommunications Association, which represents companies including Vodafone, EE, TalkTalk and Sky Plc (SKY), wrote a letter to regulator Ofcom in November demanding better service quality and access to the network.
Openreach “has consistently failed to meet its own standards on delivery times, fault rates and fault repair times. This failure affects thousands of end-users,” the group said. Ofcom must “ensure a better service from Openreach, mitigating the effect of its effective monopoly position and creating a more competitive market which encourages innovation and quality service.”
More Deals?
Still, because the combination of BT and EE is a merger of different types of businesses, the deal may pose fewer problems than a merger between two mobile carriers, Lecchi said. The deal could result in the bundling of landline, TV, Internet and wireless service, which could result in lower prices for consumers, Lecchi said.
BT’s talks to acquire EE may result in more deals as carriers try to keep up. Vodafone, the third-largest U.K. mobile provider after EE and Telefonica SA (TEF)’s O2, is considering options including a combination with John Malone’s Liberty Global Plc, which operates the Virgin Media TV and broadband brand, people familiar with the matter have said. Hutchison Whampoa Ltd., owner of U.K. mobile provider Three, is also examining whether to pursue its own deals, people with knowledge of the situation said last month.
Vodafone Group Plc (VOD) plans to ask U.K. regulators to set conditions for BT Group Plc (BT/A)’s proposed acquisition of EE for almost $20 billion to ensure the former phone monopoly won’t discriminate against rivals, according to a person familiar with the matter.
Vodafone will ask telecommunications regulator Ofcom to guarantee that U.K. wireless carriers, which rely on BT’s fiber network to transmit voice and data traffic across the country, are treated fairly when BT sets prices and connects their broadcasting towers, said the person, who asked not to be identified because the deliberations are confidential.
BT said yesterday it’s in exclusive talks to buy EE, which is jointly owned by Deutsche Telekom AG (DTE) and Orange SA. (ORA) Such an acquisition would give the former phone monopoly an incentive to favor its own traffic, which could result in unfair speed advantages, the person said.
BT combined with EE may also be required to divest excess wireless frequencies, according to the person.
Dan Thomas, a spokesman for London-based BT, said the company’s Openreach unit is already separated from the parent company as it transports traffic for other carriers. The division is regulated by Ofcom and provides fair access to rivals, he said.
A spokesman for Newbury, England-based Vodafone declined to comment.
‘Market Power’
Formerly known as British Telecom, BT dominated the U.K. phone-service market for most of last century as a government-owned monopoly. It was privatized under Margaret Thatcher in the 1980s and spun off its mobile-phone division in 2001.
Now the company is set to make a comeback to wireless services at a time when TV, landline and mobile offerings are converging as consumers increasingly watch video and access the Web on multiple devices.
Regulators are set to examine the deal because of BT’s potential to exploit its market power in fixed-line services, said Emanuela Lecchi, a lawyer at Watson, Farley & Williams LLP in London. “The main issue will be some sort of conglomerate issue, the fact that BT could theoretically leverage its position in fixed, for example, to bundle fixed and mobile, to the detriment of mobile operators.”
Ofcom declined to comment on the deal. The agency said in an e-mailed statement that while it has no power to decide on transactions, it “may be asked to provide technical advice to the relevant competition authority.” Representatives of the European Commission and the U.K.’s Competition and Markets Authority, which conduct antitrust reviews, declined to comment.
Openreach Criticism
Most of the other operators use BT’s Openreach network: Vodafone, TalkTalk Telecom Group Plc (TALK), EE and Hutchison Whampoa Ltd. (13)’s Three all buy regulated wholesale access to the infrastructure to resell to customers.
The carriers that rely on Openreach have already expressed frustration with the way the network is run. The U.K. Competitive Telecommunications Association, which represents companies including Vodafone, EE, TalkTalk and Sky Plc (SKY), wrote a letter to regulator Ofcom in November demanding better service quality and access to the network.
Openreach “has consistently failed to meet its own standards on delivery times, fault rates and fault repair times. This failure affects thousands of end-users,” the group said. Ofcom must “ensure a better service from Openreach, mitigating the effect of its effective monopoly position and creating a more competitive market which encourages innovation and quality service.”
More Deals?
Still, because the combination of BT and EE is a merger of different types of businesses, the deal may pose fewer problems than a merger between two mobile carriers, Lecchi said. The deal could result in the bundling of landline, TV, Internet and wireless service, which could result in lower prices for consumers, Lecchi said.
BT’s talks to acquire EE may result in more deals as carriers try to keep up. Vodafone, the third-largest U.K. mobile provider after EE and Telefonica SA (TEF)’s O2, is considering options including a combination with John Malone’s Liberty Global Plc, which operates the Virgin Media TV and broadband brand, people familiar with the matter have said. Hutchison Whampoa Ltd., owner of U.K. mobile provider Three, is also examining whether to pursue its own deals, people with knowledge of the situation said last month.
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