Are higher phone bills on the way? Yes, if the Three/O2 merger goes ahead

Ofcom outlines its reasons why the deal shouldn’t go ahead

Customers will end up paying more if Three and O2 go ahead with their planned merger, according to the regulator.

Sharon White, chief executive of Ofcom, said the deal between the two network operators could threaten competition.

Writing in the FT, White said she was concerned that Three, the smallest network, plans to buy O2, the largest, and control four out of every 10 mobile connections.

She quoted former US president and engineer Herbert Hoover, who said: “Competition is not only the basis of protection to the consumer, but is the incentive to progress.”

She said: “This follows a pattern of mobile mergers in Austria, Ireland and Germany. Like those countries, the UK would be left with just three networks. Some argue that operators must consolidate in order to boost revenues, increase efficiency and widen their scale to invest.”

White said Ofcom has put arguments against the merger to the European Commission, which is reviewing the proposals.

She said: “First, the deal could mean higher prices for consumers and businesses. To date, Three’s owner Hutchison has often acted as a ‘disruptive’ operator, successfully challenging established players through innovation and low prices.

“Second, the UK’s networks would face disruption. Recently, the four operators have combined their cables and masts into two networks — one used by Three and EE, the other by O2 and Vodafone.”

A third concern, she said, was that a Three/O2 merger could shift the balance of power between operators and retailers which help to keep costs down.

 

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