Mobile prices now higher due to Three buying O2, says Ireland's telecoms watchdog
Ireland’s telecoms watchdog says the recent takeover of O2 Ireland by Three Ireland has resulted in higher mobile prices here.
The telecoms watchdog said that the ‘virtual’ operators created have also had virtually no effect on improving competition in the Irish market.
The verdict is based on a review of the effects on the Irish market by the European telecoms authority, Berec.
“For Ireland, the results indicate that the merger led to price increases for low, medium and high mobile users in the first half year after the merger with this effect persisting for the duration of the study, one and a half years, for the high basket,” said Comreg. “In particular, prices for medium and high mobile users are estimated to be over 20pc higher in the first half of 2015 than they would have been had the merger not occurred.”
In 2014, Comreg had opposed the €800m takeover, protesting that it would weaken competition in the Irish market as the number of primary mobile operators would go down from four to three.
However, European competition authorities allowed the takeover after Three promised that it would offer two new ‘virtual’ licences on favourable terms to new entrants and guarantee to give Meteor (now rebranded as Eir) continued access to some of its network.
Comreg now says that one of the two virtual operators, iD Mobile, has left the market after failing to gain traction. It also says that the other virtual operator, Virgin Mobile, has only captured 0.9pc of the mobile market.
“ComReg was concerned that the [Three] commitments appeared inadequate and ineffective as a means to address the serious competition concerns and consumer harm identified by the EC,” said the Irish telecoms authority.
“In ComReg’s view, the concerns expressed to the EC regarding the Commitments remain valid.”
Berec’s study looked at the price implications of mergers and acquisitions in three European countries -- Ireland, Germany and Austria. The study focused on three different types of mobile users based on their usage of domestic voice minutes, domestic SMS and domestic data.
“Across the three countries, the study found evidence that these concentrations led to price increases in the short to medium term,” said Comreg.
A spokeswoman for 3 Ireland rejected the conclusion of the study from Berec.
“Three Ireland does not accept the findings of this report, which is simplistic and highly caveated,” she said. “The study only looks at an 18 month period after Q1 2014. During this period Three Ireland made one plan price change which had no effect on 99pc of its customer base.
“Since acquiring O2, Three Ireland has invested close to half a billion euro in modernising and updating the network. The scale of this investment would not have been possible had the acquisition not been approved.
“The acquisition of O2 by Three turned what was a dysfunctional four player market into a functional, highly competitive three player market.
“Three’s acquisition of O2 has been good for competition in Ireland as it has allowed us to continue to offer competitive plans and maintain All You Can Eat Data for our customers, one of the few operators in Europe to do so.”