The BT/EE merger could see more than one perfect storm on the horizon
Jan 18, 2016 by PolicyTracker

Blog

TagsBlog, BT/EE merger, Line leasing, Mobile, Vodafone

The merger between BT and EE might be done and dusted, but the competition question rumbles on.BT EE

With one hand Ofcom has granted BT a fresh chance at owning a mobile network, albeit one run by another management team, which looks to have put to bed questions around BT’s commitment to creating its own “inside out” cellular network using existing Wi-Fi infrastructure. 

But with the other hand the regulator continues to wag its finger, concerned, like BT’s rivals, with the amount of power the business will have in the UK mobile landscape.

90 per cent of connectivity between mobile handsets in the UK travels over fixed infrastructure that the former state monopoly controls. And it all requires a leased line. So the likes of Vodafone, Three and O2 all pay their now-direct-competitor just to stay in business. 

Ofcom’s consultation on this point, which launched last summer, saw BT come out fighting. The regulator’s proposal that BT set a fixed price for unused “dark fibre” and restrictions on the amount it charges was met by BT’s claim that these measures would cause a “perfect storm whereby BT would face a new requirement to supply passive dark fibre on regulated terms alongside harsher charge controls on active services which is disproportionate and unwarranted.”

Ofcom’s decision on this is due in April. If it presses ahead, BT will be obliged to follow the charge caps placed on it until 2019, at which point they will be reviewed.

Meanwhile, another perfect storm could be in the offing. The merger, combined with the release of spectrum in 2.3 GHz and 3.4 GHz and the sale of the L-band could leave BT with 35 per cent of the spectrum available to telcos in the UK. Ofcom has changed the way it will regulate the sale of the L-band to allow it to approve or deny any purchase of it by BT. But it hasn’t ruled out the possibility of a sale and, if it goes ahead with what it sees as fair controls on BT’s charge ceiling for its competitors’ line leases, maybe it will feel like BT has a right to be considered for the extra spectrum.

Whatever the outcome, BT finds itself in a unique position. The spectrum world will no doubt be watching the new behemoth’s moves closely.