Vodafone ‘disappointed’ by EU decision on MVNOs

21 Jan 2005

Vodafone Ireland has expressed disappointment at the news that the European Commission is to support the Commission for Communications Regulation’s (ComReg) conclusion that O2 Ireland and Vodafone enjoy joint dominance of the Irish mobile market. The EU rubber stamp opens the way for the entry of mobile virtual network operators (MVNOs) into the Irish market.

ComReg has welcomed the commission’s decision – communicated to ComReg via letter earlier today – and said that it would now proceed to “implement its proposed remedies” foremost among that will be forcing O2 and Vodafone to host the services of rival operators on their own networks in order to increase competition and drive prices down.

The commission had the power to veto the proposals, which would have forced ComReg into a humiliating climbdown but this was always going to be highly unlikely.

In a scathing statement of response, Vodafone claimed that ComReg’s study of the Irish market was “unsupported by the evidence and wrong in law”. Vodafone, Ireland’s biggest mobile operator with 64pc market share, also threatened to appeal ComReg’s judgement to the Electronic Communications Appeals Panel (ECAP) unless the regulator withdrew its proposals.

The ECAP was set up by former Communications Minister Minister Dermot Ahern TD to adjudicate on telecoms disputes. It offers aggrieved parties a forum for appealing decisions made by ComReg, without affecting their right to take subsequent legal action, if they so decide.

The crux of Vodafone’s argument, judging by the comments of Gerry Fahy, its strategy director, who was quoted in the statement, was that significant market developments that had taken place since ComReg’s original consultation had changed the competitive picture dramatically.

“ComReg has manifestly failed to appropriately consider significant competitive market developments, which have taken place in the period since their analysis was carried out,” said Fahy. “These include, among others, the completion of two new national roaming agreements, the recent performance of Meteor as an established competitor in the Irish market and the imminent entry of 3 following the roaming agreement signed with Vodafone. ‘Joint dominance’ is a complex and controversial concept in both law and economics. ComReg’s analysis fails the legal and economic tests.

“We are disappointed that the European Commission has not taken the opportunity it has to examine more closely ComReg’s inadequate analysis and flawed conclusions.”

O2 had previously said that it would definitely appeal ComReg’s decision to the ECAP were it to be approved by the European Commission. A spokesperson for the mobile firm said today that the appeals process would not be a quick-fix solution and could take months to complete.

In a terse statement, the mobile firm gave this reaction: “O2 Ireland believes that ComReg’s decision and proposed remedy of forcing O2 to open our network to service providers is bad news for Irish consumers as it will undermine competition in the Irish market and will likely force operators such as O2 to reconsider future investment decisions. O2 also believes that today’s decision is likely to stall the arrival of innovative new mobile products and services to Ireland.”

Under the appeals process, both operators will be given 28 days from the date of the commission’s judgement, ie today, to prepare material for a submission.

By Brian Skelly