Originally Posted by jabbamk1:
“Hi Redcoat,
Always love reading your posts because you're clearly very knowledgeable about the overall industry. I don't think there is a single point here that I can disagree on, not that I think they'll all come true, but they are very likely to happen given the state of the industry today.
I believe there will certainly be some restrictions put in place should the Three and O2 merger go ahead and I fully agree with your view of how BT will handle the EE merger in regards to its TV customers and Mobile Broadband services.”
Well, I'm flattered!

However I've never worked in the industry.

It's more the case of myself helping troubleshoot and fix issues to do with mobile & broadband locally and then being able to gather bits and pieces together to see what's likely to happen. As an example I'm probably the biggest defender of O2 here outside of the lamented and sorely missed wavejockglw down to simply what their overall capabilities are like than just focus on one area of provision (albeit perhaps the most important one) like fast data - but where they deserve a kicking it is only right that they get it. The same with the other three MNOs.
I seem to be one of the few here sticking my neck out that the O2/3 merger will be allowed to go ahead without a major burden of restrictions to make it unfeasable. My reasoning?
* It's clear that Telefonica are looking to exit the UK market, while Hutchinson have been making noises about looking to exit the UK themselves if this deal does not go through. The longer they are both kept waiting on a decision, the less they'll look to making anything more than a slow rate of investment on their networks. Not good for a government in Westminster that is keen to tout its commitment to a "Digital Britain".
* If the merger is off, both companies will likely offload - the UK market is a very competitive one. Arguably too competitive - resulting in thin margins that sees little get invested back into network infrastructure and well as shareholder returns. Selling the network for the right price could allow either party to either help cover deficit holes (Telefonica) or potentially look to target new markets which can give them better ARPU ratios (Hutchinson).
* Also, who would want to buy either network? BSkyB is often touted for O2, but I'm not convinced. The company has no experience in running an MNO anywhere and unlike their buyout of Easynet a number of years back when LLU was still fledgling with a developing roll out, buying out O2 would see them having to hit the ground running in investing in network infrastructure to play catch-up in the 3G/4G stakes, which could prove costly when their business operations are now a pan-European model (though not their customer one) and having a significant burden of Premier League fees to pay for when trying to squeeze even more money out from pay-TV customers. If Sky were to enter the MNO market in the UK, I'd reckon it might be better for them to start afresh with a roaming agreement outside of their main core areas like 3 had in the mid noughties - and perhaps it would be better for them to be an MVNO first to test the waters, which it appears they will be doing.
* So who else could buy O2 or 3 UK? Hard to think of any of the other main European networks that haven't been involved in the UK before will look into it, there might be interest from a North America network like AT&T or Verizon, or maybe of of the established operators from East Asia. As I said above, the UK market runs on fairly thin margins and would need a fair amount of investment on an amount of spectrum that is quite limited compared to Vodafone or EE. Going back to the 800/2600 auction, no new major players looked to make any serious effort into obtaining spectrum for a new network launch and I don't think conditions are much different at present.
* Although it would appear to be unthinkable with either party, the prospect of one of these networks deciding to hand back their MNO licence in the event of being unable to sell and deciding that running the network with the investment required is not profitable in the long run would be a major embarrassment to UK PLC.
* If the merger was to go ahead without much fuss, Telefonica could exit the UK market quietly while Hutchinson would be able to access a significant amount of infrastructure & increase in spectrum which it could in the short term rely on to fill holes in their 3G/4G coverage (the lack of a 2G fall back for 3 where I live now is a PITA, while 3G in the 900 band would also be a boost) and develop in the long term in tandem with Vodafone (provided Cornerstone will continue). In return, it's likely the new MNO would have to at least relinquish or trade some spectrum as a consequence - 3's 800 spectrum being the likely candidate though they could make a pitch to swap with NSVs 2600 spectrum but that will depend on other factors coming into play.
* But it's also likely that Ofcom & Westminster will not want to allow just three UK MNOs to exist for too long if they can help it, hence my idea in the new O2/3 network being forbidden in bidding for 700MHz spectrum when they time comes and reserving some of it for a new entrant like the 3G spectrum sale back in the early 00's. Likely it wouldn't just be 700MHz spectrum explicitly reserved for it, there would probably be a bit somewhere else too e.g. TDD 2300 spectrum. Then BSkyB might jump in.
Everyone else, feel free to critique!