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Three UK is still reeling after regulators rejected its bid to acquire O2. Now the operator’s CEO is urging Ofcom to impose “fairly significant” limits on BT ahead of an upcoming spectrum auction, arguing that restrictions are needed to curb the growing dominance of the combined BT and EE business.
David Dyson, CEO of Three UK, warns that BT’s purchase of EE has put the merged company in a dominant market position, holding “close to half” of the nation’s available spectrum. Dyson says that without intervention, BT/EE could outbid smaller rivals for even more spectrum in the next auction, further entrenching their advantage.
In an interview with the Financial Times, Dyson said: “The combination of BT and EE is incredibly strong financially. It has the financial ability to outcompete everyone in the market in how much they are willing to pay.”
A report from financial services firm Citi estimates that BT now controls around 42 percent of UK mobile spectrum. According to the same analysis, Vodafone holds 28 percent, O2 holds 14 percent and Three holds 15 percent. If those figures are accurate, they help explain why Three attempted to acquire O2 previously: a merged Three and O2 would have accounted for about 29 percent of UK spectrum, edging ahead of Vodafone but remaining roughly 13 percentage points behind EE.
At present, Three and O2 sit at similar levels of spectrum ownership, each significantly behind the leading players. Dyson is calling on Ofcom to consider limits on Vodafone as well as BT, arguing that smaller operators need a better opportunity to compete on a level playing field.
“Ofcom wants credible operators. But to be credible you need enough spectrum,” Dyson said. “Hopefully Ofcom will make some pro‑competition choices in the design of the auction and ideally start to rebalance the distortion.”
If Ofcom decides to impose restrictions on BT/EE and Vodafone, those companies could be required to surrender some existing spectrum before they are allowed to acquire more in the auction. Industry commentators noted surprise that BT was not asked to divest spectrum as a condition when the EE acquisition was approved, which might have helped prevent today’s imbalance.
Do you think BT and Vodafone should face restrictions in the upcoming auction? Share your thoughts in the comments.