Mobile citizens, mobile consumers

Mobile citizens, mobile consumers

Issued 6 November 2008

Executive Summary

Ofcom’s comprehensive review of the mobile sector reveals an industry in which competition, investment and innovation at key points across the value chain are restricted. Ostensibly competitive, with five major network players, the market structure has facilitated the relative languor we witness in the sector today, leaving it at risk of failing to deliver the improvements its stakeholders will expect tomorrow. BT observes that:

• there are high barriers to entry at every point in the value chain;
• the existing participants in the sector are therefore able to focus on competing amongst themselves without having to be concerned about truly innovative and game-changing competition from outside their circle;
• the way in which they compete has therefore become ossified – competition is centred on the high street (where the large chains of shops may themselves be seen as barriers to entry) and has led to an excessive and expensive focus on handsets and churn instead of lower prices and better and more innovative services;
• so-called ‘virtual operators’ do not solve the problem: their margins are controlled by the mobile network operators so that they become channels for the mobile network operators rather than competitive threats to them;
• the position is further complicated by the fact that the UK mobile network operators are parts of global businesses that interact with each other in many countries, and this may have had the effect of discouraging the type of disruptive market action that characterises a vibrantly competitive market.

As a result, BT believes it is time for an urgent in-depth review of the structure of the UK mobile industry to assess whether it is delivering real choice for customers. This should include a thorough examination of the case for mandated wholesale access to the mobile networks and their facilities, and what role mobile networks should play in the delivery of other benefits to citizens throughout the UK. A glimpse at what has been achieved over the last few years in relation to fixed broadband services, following the outcome of Ofcom’s thorough review of the fixed sector, provides a real example of what can be achieved if Ofcom and industry get together behind a shared vision of what a competitive sector should look like.

Equally importantly, Ofcom must build upon its acknowledgement that fixed and mobile operators compete head-to-head in today’s market place. In recognition of this convergence, we urge Ofcom to redress the balance of regulation across the whole of the communications market by releasing BT from the out-dated regulation that now merely exacerbates the competition problems we see in the mobile sector.

You can download the full response as a PDF document .

BT welcomes comments on the content of this document. Comments should be addressed by e-mail to Alun Banner.