Business Technology

Wednesday 21 November 2018

Watchdog blames rise in mobile phone bills on Three's takeover of O2

Robert Finnegan, CEO, Three (3 Ireland). Photo: Damien Eagers.
Robert Finnegan, CEO, Three (3 Ireland). Photo: Damien Eagers.
Stock picture
Adrian Weckler

Adrian Weckler

The telecoms watchdog has said Irish mobile bills have risen because of the recent takeover of O2 Ireland by Three Ireland.

ComReg, which opposed the deal but was overruled by European competition authorities, said a gap has opened up between Irish mobile prices and European ones.

The regulator also said that the extra 'virtual' operators created by the deal 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 regulatory 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 opposed the €800m takeover, saying it would weaken competition in the Irish market as the number of primary mobile operators would go 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.

However, ComReg said that one of the two virtual operators, iD Mobile, has left the market after failing to gain traction. It also said 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 (European Commission)," 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 made in the Berec study.

"Three Ireland does not accept the findings of this report," she said. "The report is simplistic and highly caveated. 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. It has been good for competition."

Irish Independent

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