The Federation of Communication Services (FCS) response to the CMA on the proposed

Vodafone/Three merger

The FCS represents companies which provide professional communications solutions to business users. Our members deliver telecommunications services via mobile and fixed line telephony networks, broadband, satellite, wi-fi and business radio. Our members’ customers range from SMEs, home-workers and micro-businesses up to the very largest private enterprises and public sector users. FCS is the largest trade organisation in the professional communications arena, representing the interests of circa 350 businesses which supply B2B services nationwide.

The FCS represents many CPs, and they will have differing views on the proposed merger, some believing that a strengthened third player in the market will provide better service with better network coverage, others seeing a reduction in competition inevitably leading to higher prices.  We are, therefore, pleased that the CMA is considering the proposed merger and welcome a robust review of the implications and impact it could have on the market.

Fair and reasonably priced mobile network access is central to effective competition in the telecommunications market, both for MVNOs and resellers. Mobile offerings are often critical to the innovative and varied offerings our members provide to business customers. It is vital to the growth of the telecommunications market, and the UK economy in general, that the innovation and entrepreneurship which our members provide continues.  For this to happen, they need to be able to access mobile services easily and at a fair price.  

At the reseller level, network access is seen as a “gift” rather than a “right” and this makes it difficult for resellers to compete against vertically integrated providers.  It will be important that the CMA considers appropriate remedies to guarantee appropriate access to services across the complex supply chain and to ensure that prices do not rise.  This is particularly important as the merger would remove the one MNO (Three) that does not currently offer fixed line and broadband services and which does not have the economically rational incentive to favour their own downstream businesses. 

If the proposed merger goes ahead, the market will be made up solely of vertically integrated fixed/mobile providers.  The FCS therefore believes that there will need to be stringent regulatory safeguards in place to ensure that effective competition flourishes.  The FCS would encourage an equality of access approach, ensuring that MVNOs and resellers can access services at the same price, terms and conditions and quality, and using the same processes as the retail arms of the mobile providers.

The FCS notes that both Vodafone and Three have publicly stated that they do not expect price rises as a result of the proposed merger.  The FCS believes that there should be strong regulatory safeguards in place to ensure that this would in fact be the case.

The FCS can provide the CMA with valuable insight into the reseller market and complex supply chain which is a key feature of the mobile market servicing business users and would be very happy to discuss our submission further if it would be helpful.

1 November 2023