Mobile rivals question Orange and T-Mobile merger

The EC has the final say on whether a review into the merger takes place in London or Brussels

Several leading mobile phone operators have called on UK regulators to examine the proposed merger between Orange UK and T-Mobile UK, rather than the European Commission (EC).

Vodafone, O2, and 3 Mobile have all said that they believe the UK authorities will take a stronger stance on the move than those in Europe, even though the EC has the final ruling on whether the investigation should take place in London or Brussels.

The mobile operators are worried that the merger will give Orange and T-Mobile an unfairly dominant position in the market, as the combined entity will hold a whopping 84 per cent of the highly important 1800MHz spectrum band.

This spectrum is key to enabling fourth-generation (4G) wireless technologies. Last year, before the Orange T-Mobile deal was on the cards, the government settled a deal with operators to ensure that the spectrum was shared fairly, in part to help with its own plans to provide broadband access to all homes by 2012.

An O2 spokesperson argued that the concentration of the 1800MHz spectrum would "distort" the market for 4G Long Term Evolution services.

"It's a significant competition issue with serious implications for UK consumers, the government's Digital Britain agenda, and future spectrum auctions. As such we believe the Office of Fair Trading should request the merger be reviewed in the UK," the spokesperson told V3.co.uk.

Justine Campbell, Vodafone UK's legal and regulatory director, joined the calls for the merger to be reviewed in Britain, and also raised the issue of the allocation of the 1800MHz spectrum.

"The UK operators' spectrum holdings need careful review to ensure that competition is safeguarded, and we believe that the UK authorities are best placed to investigate this," she said.

Guy Middleton, head of corporate communications at 3, added that, as the merger is between two UK companies, it should be reviewed in the UK where it will have the most impact.

"There are competition issues to be addressed, not least the future of spectrum holdings for mobile broadband and the impact this merger could have on current network sharing agreements," he said.

Middleton suggested that the combined T-Mobile and Orange should be required to release a significant amount of 1800MHz spectrum to address this issue.

If the merger does go ahead it would create the largest mobile operator in the UK, serving almost 30 million customers and ousting O2 which currently holds the top spot.

Consumer groups have also voiced concerns over the move, saying that it will affect consumer choice by reducing the number of operators on the market from five to four.

The Communications Consumer Panel and Consumer Focus signed an open letter to the EC in December asking for the merger to be assessed in the UK, and said that the impact of the merger would be felt most strongly in the UK.

"The relevant UK regulatory authorities would be able to apply their detailed knowledge of the particular characteristics of the UK's mobile market, and the national and sub-national issues that affect it," the letter read.

T-Mobile and Orange were contacted but declined to comment on the story.