O2 and Vodafone obliged to carry competitors


27 Jan 2004

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The Commission for Communications Regulation (ComReg) has decided that both O2 and Vodafone, with over 95pc of the Irish mobile market, are designated as having significant market power and as such are obliged to allow other operators access their networks. It is also possible that O2 and Vodafone will be compelled to host mobile virtual network operators (MVNOs) on their networks.

Today, following a review of the mobile market, ComReg said that it found the Irish market for mobile phone services to have one of the highest concentrations in the EU, with the two leading operators O2 and Vodafone having 95pc of customers between them.

ComReg has proposed that both Vodafone and O2 will be designated as having significant market power and as such will be obliged to allow other mobile operators access to their networks.

The regulator’s consultation found that the prices of the two main operators have not changed significantly following the arrival of Meteor into the market, with the two main operators having significantly higher average revenue per user (ARPU) rates.

According to ComReg, the Irish ARPU level is significantly higher than those ARPUs earned in the majority of other EU countries. “While operators have claimed that higher ARPU’s are the result of higher usage of mobile phones by Irish consumers, ComReg has found the evidence for this inconclusive,” the regulator stated.

ComReg has said that it is also consulting on whether Vodafone and O2 should also be obliged to provide access to other service providers such as MVNOs. MVNOs are companies that offer mobile services on the back of the infrastructure of an existing mobile operator and in this way can compete in the mobile market without having to build a full mobile network.

The decision will prove to be a significant about-face for Vodafone’s Irish operation, which three years ago when it was then known as Eircell, caused the closure of the country’s first MVNO Cellular 3 when the company showed the first signs of success. Cellular 3, under the Imagine brand, acquired bulk airtime from Eircell and then began to operate as an MVNO, quickly amassing 20,000 customers, through its own brand and through associates like Spirit. Eircell’s decision to stop the service resulted in a High Court case. The court ruled that despite having 64pc of the Irish market, Eircell was not in a dominant position and was right to protect its position. Cellular 3 closed for business with the loss of around 240 jobs.

MVNOs, such as Virgin Mobile in the UK, are currently enjoying unprecedented popularity across Europe. However, market watchers have warned that Ireland is too small a market to support a viable MVNO. The consensus at a Wireless Wednesday meeting on the sujbect of MVNOs last summer was that a successful MVNO in the Irish market would need to be also operating in a number of other European countries if it wanted to be viable.

ComReg said that the measures it is proposing are being directed at the wholesale element of the mobile market, rather than at the retail level. “Under the EU Framework, retail measures or direct price controls should only be imposed where wholesale remedies on their own would not address the market failure identified”, the regulator said, adding that it is still consulting on whether it should consider a more direct or interventionalist solution aimed at controlling retail prices.

By John Kennedy