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Update: BT buys EE – are mergers good news for customers?

BT and EE merger

BT has bought the mobile provider EE. O2 is expected to merge with Three. Is it time that the telecoms market was looked at by competition authorities? What do you think about these mergers?

BT today announced that it had bought mobile firm EE for £12.5bn, subject to approval by BT shareholders and the Competition and Markets Authority (CMA).

BT’s takeover of EE will create a telecoms giant covering broadband, phone lines, TV and mobiles. It said in a statement:

‘The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities.’

What will happen to prices?

On its merger with EE, BT’s CEO Gavin Patterson hinted at cheaper deals for customers, saying that bundled fixed line and mobile services have reduced prices.

But there are other goings on in the telecoms industry. Sky has announced that it’s to offer a mobile service using O2’s network, and TalkTalk has bought some Virgin Media and Tesco Broadband customers.

Given that Three is also expected to buy O2, will these deals really be good news for us consumers? TalkTalk CEO Dido Harding has expressed concerns that mergers could lead to higher prices:

‘In Austria, where four mobile operators went into three, prices went up. People are right to be suspicious about too much consolidation.’

Competition in the mobile industry

We think that competition authorities should look at both the proposed mergers and the market in the round to make sure that you’re protected from unfair price increases or poorer service as a result of less competition.

This market has shown it has a long way to go to work well for its customers with a history of mid-contract price rises and millions of mobile customers paying more than they should. Unbelievably, people trust banks more than they trust mobile firms – there’s a danger that these mergers could damage that trust further.

What do you think of BT’s announced purchase of EE, and the expected merger between Three and O2? Do you think it could be good news for customers, or are you disappointed by less competition in the mobile market?

[UPDATE 28/10/15] – The Competition and Markets Authority has provisionally cleared BT’s takeover of EE, saying that it was ‘not expected to result in a substantial lessening of competition in the UK’.

John Wotton, chair of the CMA inquiry, said:

‘Having considered all the evidence, the group does not provisionally believe that, in a dynamic and evolving sector, it is more likely than not that BT/EE will be able to use its position to damage competition or the interests of consumers.’

Our executive director Richard Lloyd commented on the CMA’s announcement:

‘Fewer players in any market is rarely a good thing, and with the proposed O2-Three merger also due to be considered, it would be very concerning if the UK were to end up with only three mobile network operators. Ofcom now needs to make sure consumers are protected from higher prices or poorer service as a result of the merger.’

Comments

This is the point where landline providers will start to offer inclusive calls to mobile numbers.

With the Mobile Termination Rate now under 1p per minute, this is long overdue.

Good news for me is I just changed away from EE for my mobile because coverage where I live is intermittently quite poor (apparently when they went to 4G the number of mast aerials reduced) and previous experience of BT is that they are not the best value. Still perhaps this new larger company will buck it’s ideas up a bit but it’ll take a long time to get me back as a customer.

Looking at the behaviours of big corporations, the mind is drawn to the appearance of lava lamps. They are a constantly changing fusion of blobs that expand and collapse as they evolve and reform due to the conflicting properties of their contents [and the stimulation of a heat source – competition in this analogy].

BT has set out to achieve domination in the delivery of mutiple media channels and that must be worrying. Sheer scale and volume of traffic will make it increasingly difficult for other operators to compete and remain viable, and at a stroke this deal raises the barriers to entry to this enormous market. BT is pitching a more socially responsible justification for its acquisition of EE and is projecting a more virtuous trading model than the likes of Sky and TalkTalk. Will this just be window-dressing or will it be sustained when the dust has settled?

The CMA will automatically get drawn into the approval process for this take-over and some peripheral disposals will no doubt ensue, but once the shareholders have said “Yes” what on earth can the Authority do to stop it? The challenge now is for Ofcom to start beefing up its act so it can sit on the tail of this emerging mighty corporation to protect the public interest.

Carolyn says:
5 February 2015

Remember Genie, the predecessor of o2? As one of the original providers with Vodafone, Genie belonged to BT.

Genie became o2 and went into the corporate acquisitions. Just shows it’s all a game for BT and the rest. If they wanted a provider, why not keep o2? Well, they made more money for shareholders by horse-trading and that’s the way all the deals will go.

If we are really lucky, there will be fierce competition between the remaining three mobile providers – until they go liquid.

Stuart says:
5 February 2015

These mergers are potentially bad for the consumer. BT has a bad reputation for customer service. O2 serves better. What will be the outcome when there are only a few giant providers. As we can see with the energy providers, the worst performers are the largest while the better ones are the smaller ones.

Smiles says:
5 February 2015

Yeah absolutely right! BT are an awful company to deal with. And when these huge companies merge in this way, it is never in the consumers best interest. I am with 02 and I have been with them before and out of all providers that I have been with, apart from T-Mobile, has been the best. I am cringing at the thought of 02 possibly merging with 3! It’s a horrifying thought. I think providers should consult with their customers before going ahead with this kind of thing. I’m not very pleased about the 02 merger, thankfully I am not an EE customer, but it is wrong that these companies are being swallowed up and consolidated into one, it’s un-competitive and un-acceptable.

the fewer providers, the less choice if you don’t like the one you’re with. look what’s already happened with phone shops that sell unlocked handsets- we used to have the link, phones 4u, mobile phone centre, & carphone warehouse. of those, only the latter remains- & they’re not as cheap as they were when they had competition.

Joan says:
5 February 2015

I’ve been with O2 for several years and have been satisfied with their service, though it’s not as good as it was. Bigger usually means worse so I will probably move to a different provider if the merger goes through – not many left to choose from though, which is the point.

And Carphone Warehouse is now part of DSG, better known as Currys\PC World.

I changed from O2 to three, as I am only on pay as you go, phone 3d, text 2d & 1mb 1d.
definitely cheaper than O2.
I do not know why three is so much cheaper, long may it last!

I think that with fewer players there may be an opportunity for Ofcom to address the real problem with mobile and that is the truly appalling patchy coverage on all networks. I am talking about in major built up areas – lord knows what it is like in rural areas. I am always amazed that I get a far better signal in the Pyrenees and in rural Spain than in parts of central and west London, and loss of signal on the M4 between Reading and London on average 3/4 times during a journey.

My county of Norfolk is notorious for large areas with no, or very weak, signals [depending on the network]. Perhaps they falsely believe that Norfolk is so flat we can use semaphore and Aldis lamps to get our message across.

I was under the impression that very many masts actually were shared by the competing networks so merging networks will not improve overloaded masts.

It may though provide better coverage for EE subscribers if BT does have more rural coverage.

Looking at a specialist site thinkbroadband this comment provides reasons why coverage may be poor or slow.

“Well there are only a few reasons that the speed would drop.

1) There is a fault with the mast.
2) There is a fault/capacity issue with the backhaul.
3) The bandwidth is being used up by other users, simple contention.
4) Three have changed something, i.e. channel width and or Tx power that now means the speed is lower for your location.

Either way you have no chance in hell getting Three to admit what the issue is or that there is even an issue. …..

To be honest with 3G it is pot luck. It is all too easy for a mast to become over loaded (contended) as Three have no control over how many customers might sign up for their service in the coverage area of any one mast. Speeds are often rubbish in towns and cities as the masts are overloaded. Where I live I’m lucky to get a 3G signal even though Three claim indoor coverage. And in locations with full signal it only manages 0-5~0.7Mbps. My usual blame for this is the student population… Out of town on a rural mast I have seen speedtests for 26~30Mbps on DC-HSPA” posted by 5km

J Tonks says:
5 February 2015

I don’t get a good service from BT. Have a hub in bedroom where light keeps me awake. OK can unplug it but have to remember to plug in, causing delays in accessing web. Additionally Infinity keep cutting out when I am on the web. Never happened with my previous broadband. I was going to change but will stick with it until I know the outcome of other takeovers. My mobile is currently with EE but coverage in Hampshire when visiting is poor. Based on BT’s past behaviour think takeover will lead to rising prices and poorer service.

[This comment has been tweaked to align with our commenting guidelines. Thanks, mods]

Tip with that light, Mr/Mrs/Miss/Ms Tonks: stick some plastic tape over it: white will usually allow a dull light in the dark so that at least you can tell that it’s on.

Gerry says:
5 February 2015

I fervently hope that BT won’t be allowed to take over EE (remember when EE were Orange and T-Mobile, competing with each other?) and that Three won’t be allowed to take over O2. We need much more competition, not more quasi-monopolies !

Also, customers shouldn’t be forced to have their broadband, landline rental and calls all supplied by the same company. This insidious practice has become virtually universal, limiting competition, preventing transparent price comparisons and making it very difficult for new companies to enter the market. Similarly, everyone should be able to access indirect providers such as 18185 so that they can always shop around for cheaper calls.

It’s bad enough with the Big Six energy companies, but at least there are dozens of other smaller companies from which to choose. We need to have at least the same unrestricted choice with telecomms companies, not just BTEE, ThreeO2 and Vodafone.

If this take over is successful in my opinion it will be too large and give them an almost a monopoly which is not to the good of the consumers.

Appalling news I moved away from BT. I’m with Orange part of EE, so I will have to move again.

John says:
6 February 2015

I am in the same boat as Anthony, and will have to move myself again. By the way did you know that Open Reach and Plusnet are both owned by BT?

Robert says:
5 February 2015

My major concern about mobile telephone services is that the physical network (masts, radio networks, and associated computer systems) is not unified. Different companies operate their own networks, with the result that no one single network gives a good service across the bulk of the UK.

Our UK obsession with competition means that there are multiple networks in highly populated areas, and none in less populated areas. In this case, competition is far worse for users than a monopoly would be.

Gareth Vaughan says:
5 February 2015

This is very true. Sadly, more choice does not necessarily mean better things. It does, however, mean more hassle and difficulties for the consumer who simply wants a cheap and efficient service, not the bother of having to change all the time, or finding that he lives in a part of the country where service is poor or non-existent because it is not profitable for anyone to provide it. This is where Capitalism fails and where it is the responsibility of Government to intervene.

I’m not concerned about BT buying EE. After all, BT sold O2 to Telefónica, so it’s perfectly reasonable for BT to buy a mobile network again. However, I am very concerned about the potential takeover by Three of O2. This is bad for competition, as it would reduce the number of mobile networks from 4 to 3. The number had already been reduced from 5 to 4 when EE was formed by the merger of Orange UK and T-Mobile UK. The elimination of 2 networks is clearly bad for competition and should be blocked.

Alan Dowling says:
5 February 2015

Many people seem to forget that BT was originally the state owned GPO Telephones department.
If it was still state owned – i.e. by you, me any every British taxpayer – we would have a greater say in what they were doing. We would be able to ensure that they acted fairly without the one goal of making even more profit than they are doing now.

In those circumstances, they (and we) would be able to keep prices down and service standards up right across the media industry by dint of being the most competitive provider of these services.

Gareth Vaughan says:
5 February 2015

I agree absolutely.

David Milner says:
5 February 2015

At last a British company flying high in the market place. British technology for british people.

Lots of BT bashing going on!! I have BT and their service is excellent.

II am with PlusNet which is owned by BT but far better at customer service. WHY? Surely buying up another provider is contrary to efficiency. Why don’t they implement PlusNet values across the board?

Brian D says:
5 February 2015

Money talks and greed for possession is still the greatest sin of all. The majority of pensioners struggle to keep up with ever rising prices for the necessities of life but when it comes to companies beginning with the word British i.e. Gas and Telecom, pensioners have no chance. C’est la vie a la Grande Bretange.

Very good news,
What annoys me is that the great British voter, voted in a government that promised to privatise public companies and free them up, when these companies perform, as private companies and all that entails, they whinge.
Can’t have I both ways?

I have been with T-Mobile for years and was quite happy till they merged with Orange to make EE. The customer service in the EE shops is appalling compared to what it was with T-Mobile shops. Unless you are in the shop to spend money they don’t want to know about your problems.
I have BT infinity and am very happy with it, customer service has been good on the rare occasion they were needed. I therefore look forward to this take over and hopefully a lot better mobile service and better deals.

The best customer service was in the independents – and essentially, they have been driven out of the market by bullying tactics from the big providers.

Why? So that when someone walked into a shop to talk contracts, they got a one-sided view and a hard sell. They then had to visit three/four more shops and try to decide which network/provider gave the best deal. Almost impossible!

Clearly, the preference of the Big Four (was Big Five) is for double dealing and obfuscation rather than allowing customers a fair, free choice. Anything new there?

Virgin should be forced to wholesale their fibre network in the same way BT is. It’s the fastest but also the most expensive.

You should also be able to buy tv services on a channel by channel basis instead of having to buy a bundle.

Gareth Vaughan says:
5 February 2015

I changed last year from 3 to EE as my mobile provider and have had trouble free service ever since. They are a great company with a wide coverage (coverage on 3 was poor in my area).
BT have terrible customer service. I fell out with them thirty years ago when they loused up a perfectly simple line transfer when I moved house. I was without a landline connection for nearly 3 weeks – WHOLLY UNACCEPTABLE. I vowed I would never use them again – and I haven’t. Now it seems they are coming back into my life by a back door! The merger will be very bad news for the mobile market, as it will make BT dominant. We shall have the complacent giant back.

anthony westney says:
5 February 2015

not much any body can do if BT wants to take over EE the public have no say in the matter.