Regulatory decisions being taken this year will shape the UK telecoms industry, and impact businesses, for many years to come. And at the heart of much of that regulation is BT.
Ofcom has long said there needs to be four mobile network suppliers, but proposed acquisitions and mergers may require the regulator to rethink that position. BT wants EE; O2 and 3 want to merge. If both deals go through then there will only be three suppliers. That need not necessarily be a problem IF there are plenty of Virtual Mobile Network Operators (VMNOs). But that IF is looking increasingly unlikely.
The VMNO business
Sainsburys’ dipped their toe in the VMNO business, but their 150,000 users were apparently not enough for Vodafone to agree a deal, and as a result those thousands of customers have had to look elsewhere in a shrinking pool. And if other VMNOs, residential or business, that have been set up continue to experience challenging issues over agreeing deals and volume commitments, that pool could quickly dwindle faster than the Aral Sea. Without a boost in VMNO numbers, both acquisition/merger deals going through will be to the detriment of both consumers and businesses.
What about Openreach?
The other issue involving BT is Ofcom’s decision on Openreach. Although Ofcom did not go as far as separating BT and Openreach, it did suggest certain changes including a new governance model. Unfortunately, these are unlikely to transform the market.
Problems with Openreach still remain today and look likely to continue over the coming year; currently, many BT targets are set so low that achieving them requires no great effort. Additionally, there is no financial penalty for missing them. On targets signed off in June 2015, it is apparently acceptable for one in five faults to take more than two days to fix, and one in five installations to take more than two and a half weeks.
Another frustration for the consumer is that they cannot talk directly to Openreach. If there is a problem, customers have to contact to the company they ordered the services through, who will take up the issue with Openreach.
The impact of a Brexit
In June, the UK will vote on the EU referendum. Should the country decide to leave, one thing that could be impacted is the planned changes to make voice and data roaming free across Europe in 2017. This obviously relies on the agreements between the operators. If the UK were to leave the EU these agreements might have to be renegotiated and there is no guarantee that the same deal would be obtained.
So, there are plenty of possibilities, unknowns, and landscape-changing events on the horizon for the telecoms industry in 2016. Only time will tell what will come to pass.
Dave Millett at Equinox