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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
Lizzie G says:
5 February 2015

This could be the impetus I need to move away from EE. T-Mobile was fine but I’ve been less than happy with EE.
Staff in the stores don’t want to help – they just want to sell you phones/broadband/TV etc. and I’m afraid dialling 150 for their customer support isn’t good either. They never seem to understand the question!
On the other hand, BT supply our home broadband and TV so I’ll wait and see what they can offer me before I decide to move.

I live less than 18 miles from Edinburgh. I used to get a mobile signal, but since they went to 2G, 3G & 4G I cannot get a signal because they cut down on the masts

Gordon Miller says:
5 February 2015

BT’s prices are too high at the moment, so what effect will a merger have?

BT’s prices are required to be high by the regulator, so that in the name of competition, others can undercut them. They are supposed to overcome this by providing extras like excellent service, free hotspots and … (I can’t think of anything else. Can anyone?)

BT’s retail prices for calling 084, 087, 09 and 118 numbers are guaranteed to be the LOWEST.

The NTS Retail Condition imposed by Ofcom ensures that BT makes zero margin on call origination to these numbers. Uniquely regulated, BT’s rates vary from all other providers.

Upon introduction of the “unbundled tariff” on 1 July 2015 this condition will be removed.

I used to be with Orange and found their Customer Service to be quite good, then they were bought out by EE and Customer Service took a step back to the stone age, only interested in me when I asked for the code to allow me to take my number to my new provider.

I can’t see a fewer number of providers being good for consumers, if banks can be forced to sell bits off, why can’t the mobile phone providers.

Florriebunda says:
5 February 2015

From past experience mega takeovers are not good news for consumers. One concern is that all the contestants in these mergers had poor reputations at one time or another. Will mergers result in mega problems for consumers?
I know a sample of one is not highly regarded but since I changed to Firefox,Mozilla, Plusnet and to a very basic mobile phone I have had absolutely no problems at all, with any of them. Before changing from BT , O2 MS Windows and IE I had numerous problems with broadband connections, failures and poor customer service with my phone. Small is beautiful perhaps ??

We need a regulator with teeth, not these ‘smokescreens’ we have now.
And bring back the ‘Monopolies and Mergers Commission’ or introduce ‘anti-trust’ laws.

We are all being ripped off by ALL utilities with the government’s blessing.

Time for a serious change – some politicians with morals and ethics, not these self interested puppets of big business.

Whilst we have this government we don’t stand a chance of any kind of fairness or justice.

Ray, the government (at least, the Tory side of it) says that we need strong private businesses for our country to compete in the world. So large corporations (which are mostly foreign-owned) should be helped to be successful so that they provide jobs for low wage earners and taxes for the government. Can anyone find fault with that?

We love this thought provoking comment, Florriebunda. So much so that we’ve made it our comment of the week! We’d love to see you posting more and to celebrate, perhaps you could create an avatar : https://conversation.which.co.uk/your-account/ 🙂

” Ray, the government (at least, the Tory side of it) says that we need strong private businesses for our country to compete in the world. So large corporations (which are mostly foreign-owned) should be helped to be successful so that they provide jobs for low wage earners and taxes for the government. Can anyone find fault with that?”

I assume that was ironic David as if you seriously believe that large corporations are better for the country then we need to start looking at a long conversation.

The multi-nationals, and the TTIP and TIP agreements being negotiated are all much of the same picture. The bigger company you are the more you can get away with salting money into tax havens. Starbucks paying £1m on a turnover of £714 – after paying £98m in “fees” to the Netherlands is just par for the biggest companies.

In relation to providers I think Governments need to realise that if you do not have several players in a market a cosy collusion of interests will prevail.

Wiglet says:
5 February 2015

Not happy BT getting larger. After upgrading to Infinity my landline became very crackly. I suggested the problem lay between the street cabinet and point into my home. After ignoring this and three engineer visits to no avail they took my suggestion and hey presto, clear phone line.
I only hope Vodafone stays as it is in the UK, having been a customer since the start. I have never had a problem with coverage, and the staff at my local Vodafone shop are excellent.

Just thought I would add – For a so called ‘communications company’ BT are about as difficult to communicate with as it gets!

And don’t believe the hogwash about ‘BT Openreach’ or whatever they call themselves (the broadband connector) not being part of BT – they ARE part of BT and completely uncontactable.

And what’s more they have a monopoly! No competition or accountability whatsoever.

And no one does a thing about it.

I have never had a problem contacting BT Openreach. The email address of the CEO is available, The phone number and email address of the head of customer services is available and so are the contact details of the area operations managers.
I just email the CEO and I always get a fast response, no matter what the problem might be.
BT are now waking up and getting involved again with the modern communications that are currently in the marketplace. Hopefully this will speed up the fibre roll out to the potential 330mb that is available.

330mb From BT , In Your Dreams Only

Lizzie G says:
5 February 2015

Just wondering, Tel, are things that bad with BT Openreach that the only way to get them to sit up and listen is to contact their CEO? That’s a pretty awful indictment of an organisation when no-one lower down the chain of command can resolve your issues.
Having said that, you’ve now made me realise that contacting any organisation via their normal “1 for yes and 2 for no” phone systems is a waste of time and only by going straight to the top does anything get done.

Peter,
It’s called ‘Fibre on Demand’ and I suggest you look it up. You should always do your homework before you comment on anything that you don’t know about.
You pay £3.50 per metre to run fibre from the cabinet to your house.
£750.00 connection charge
£99.00 per month broadband rental.
It is a BT Openreach service and unfortunately not many people know of it. Of course many people probably can’t afford it, but if you can, it’s available.

With poor reception or non existent broadband why not look at satellite connections. I live in the middle of nowhere and when I first wanted broadband I purchased and set up my own satellite connection and used that until our exchange was upgraded. There was a free satellite to connect to at one time which you could use. I don’t know if it’s still available but some companies charged for accessing it.
There’s BT wholesale as well that can do things for connections, but like everything, you have to pay for extras for a better service.

Ian Hill says:
5 February 2015

I just changed my mobile from o2 to 3, because Which? said they had better coverage in my area (but kept my email address when changing to your recommended Zen).

Before Commerce got a hold the old GPO managed to wire up to an enormous number of properties, even remote farms, but the plethora of radio-transmitted money-makers still can’t get their act together – rather like the breakdown of the railway industry. Divide and conquer? I have yet to see any benefits from either due to competition – rather the opposite.

Back in those ‘good old days’, Ian, the GPO was expensive and wasteful of resources (including labour) compared with most modern businesses. There have been a lot of comparative cost-benefit analyses done that prove this. Of course, government departments have also improved efficiency, so a retained GPO service would presumably have done so too, but don’t look back through fire-tinted lenses: telecommunications are now under a quarter of the price now than 30 years ago.

Why did remote farmhouses get linked free at 1000 times the cost of a suburban line? No-one thought how wasteful it was! Today, such links are not allowed without a co-payment and people converting wilderness barns have to make an economic choice rather than have half a million pounds spent to give them the free 30-mile line.

Could not agree with you more. You need to be old enough to remember how absolutely awful the nationalised utilities were. You had to wait weeks for a phone line to be connected, even if the line was already there but disconnected. The prices of gas, electricity and phone calls was extremely high relative to the average earnings.
However, less competition is not such a good idea.

This could have been resolved by making people personally responsible for what they do at work. Something like the Consumers Association could also have kept their overall systems and rules in line with what consumers need and are paying for. I have written elsewhere on this list about how BTOR’s business practices are incompatible with resolving intermittent faults, for example.

The fact remains that for a national network, such as wired telephone lines, to be run by competing agencies isn’t really that sensible and leads to a lot more complication. However pressure on agencies such as BTOR can in the long run actually be helpful if it enables things like intermittent faults to be rectified more effectively.

If they are all the same company, won’t it reduce the problems with varying signal coverage between the different service providers?

Hopefully satellite broadband ISP will come down over the next few years and all this will then be behind us. Everyone can use VOIP (Skype) or a similar service. Maybe investing in satellite telecomms will be better than BT in the long run. (New Scientist 31 January page 18.) But if the party that wants to increase tax penalties on successful investments gets into power, maybe we should all just blow it off anyway and not bother about which company owns what, and rely on benefits if we fall on hard times.

I seem to remember that the providers were to get together to combine coverage where it was sparse. What happened to that idea?

Basically, the regulators cannot keep up with the pace of change – their long-winded procedures get overtaken by events and the companies leave them standing around scratching their heads. It’s happening in the energy business as well. It’s like a corporate musical chairs game where the participants are taking away the chairs faster than the rules of the game can be re-written.

Re: “the regulators cannot keep up with the pace of change”.

Regulators are usually reactive rather than proactive, but their speed of reaction is very very slow.

In 2003, BT scrapped the price differential between local and national calls to 01 and 02 numbers and moved subscribers on to inclusive call plans. This instantly made calls to 0845 and 0870 numbers relatively more expensive with every such call further pushing up the bill.

It took Ofcom until 2007 to introduce 03 numbers. These are always charged at the same rate as calling 01 and 02 numbers and count towards inclusive allowances on landlines and on mobiles. However, this did not address price confusion with 084 and 087 numbers with many suppliers of these numbers still selling them to businesses as “local rate”(sic) and “national rate”(sic) numbers. This obfuscation has led many organisations to retain usage of these numbers long after they should have done the right thing and moved to 03 numbers. To this day, the ASA Bulletin of September 2005 continues to be ignored by many.

The inclusion, in 2009, of calls to 0845 and 0870 numbers within some landline call plans further confused the situation and created another reason for businesses to not move to 03 numbers as they could continue to quote BT’s non-typical policies while ignoring the fact that the majority of callers use a landline provider other than BT or use a mobile phone.

It has taken Ofcom many years to get their head round the situation and find a solution that does not place BT’s non-standard call rates at the centre of everything. On 1 July 2015, call pricing for 084, 087, 09 and 118 numbers moves to a provider-neutral model with the caller’s phone provider and the called service provider separately declaring their part of the overall call cost. The requirement to declare their Service Charge should be a wake-up call to all users of 084 and 087 numbers as to the true nature of these numbers. On the same date, the regulation that caps BT’s retail call prices for 084, 087, 09 and 118 calls will be lifted.

It will have taken 12 years for Ofcom to have to have got us to this point from when BT made those original pricing changes way back in 2003.

Mike Bayliff says:
5 February 2015

My first mobile was about 14 yrs ago with Orange, they covered all the West Country, with full strength at my home. Now, there is zero coverage at home and very little anywhere in the West Country outside the large towns. Why? Masts are taken down and not replaced, result, no coverage.
The fewer providers there are in the market, the less the low population areas have of any chance of proper signals.

Brian Sandall says:
5 February 2015

I am a EE customer and dread the thought of BT taking them over BT is grossly overpriced,arrogant and very poor customer service,I for one will be changing from EE if this goes ahead

John from Lincolnshire says:
5 February 2015

At present I am with PlusNet that is owned by BT, when they paid loads of money to show football, I waited for PlusNet to put up their prices which they eventually did but mainly with BT. I await increases with regards to the takeover with EE with trepidation, and increases which will be inevitable in the future, but who can I change to? – We’ll see?

Bt & EE Probably The 2 Worst Offenders Joining Up WTF ? Bad News All Round ,Just Pay A Visit To Their Home Pages ,Thousands Of Complaints All Ignored ,With People Like Me Just Waiting For The Contract To End , 2 years Of Misery ,Soulless Customer Services, Once You Signed That 18 – 24 Month Contract They Take The P**s Big Time .Virgin Broadband ,Phone And Broadband Only, £28.00 A Month For 18 Months Half Price For 6 Months , After 8 Months I Was Paying £38.00 A Month , After A Year I Was Paying £48.00 A Month And The Lies They Tell You About The Broadband Speed , Very Soon Their Will Be No One To Change Supplier With ,I Say Ban The Merger .

bill tompkins says:
5 February 2015

I left BT Mobile (Cellnet) a very long time ago as a result of their frankly awful customer service. I went to TMobile (now EE) and they have been (mostly) pretty good. I’m already looking to move.

kmorris says:
5 February 2015

I left the landline side of bt due to the price increases and I would not have a landline at all if for the fact it is needed for the broadband and I will definitely be leaving ee when my contract runs out

i agree with Bt taking over EE.
I am concerned that the price is way too high, and that Bt yet again is trying to stretch itself a little too far.
Do not see a problem with them expanding in this market as a competition issue, it is now an over regulated market in the EU in any case.

Tarriffs need standardisation and simplification so that customers can compare like with like.

Sky, Virgin and others for their own (understandable) commercial advantage appear to do the opposite

I am still with Zen for broadband – I like the fact that there is no penalty for switching – just a month’s notice – it is good ethical business practice. They are not the cheapest but perhaps there is a price to be paid for behaving properly.

I heard that Three use O2 air time – don’t know if this is correct – which might explain why I have almost no reception where I live on both O2 and my iPhone which is with Three. Three seems much better value than O2 and charging seems less complex. I know they have not come out well on Which surveys for customer service. I recently cancelled my O2 over the phone – it was hard work, they kept giving me better and better offers to stay – but since I had been with them for many years (I was previously with BT until they created O2 and spun it off – or at least that’s how I remember it) I wondered why I was not being given favourable deals already! There seems to be no loyalty bond – its a bit like savings accounts at banks – once you’re “in the keep net”……

I think it is essential to keep a reasonable number of players in the market place, I am dubious about “economies of scale” in this context – my partner packed in using Orange due to their terrible customer service on Broadband – unfortunately a lot of people just look at deals rather than the overall customer experience. It seemed that the company had been bought up and was being used purely as a cash cow and starved of the necessary investment.

The government needs to take action in this market and give clear messages to business – a free-for-all is inappropriate. It is no good if companies make their offering more and more opaque so that customers can’t compare suppliers and products. It is a difficult job for government just like in other hi-tech fast moving areas such as on-line fraud but they are there to provide leadership. If they don’t, as our elected representatives, who will?

Two important pieces of tariff standardisation will take effect on 1 July 2015.

One is the introduction of the “unbundled tariff” for all calls to 084, 087, 090, 091, 098 and 118 numbers. At a stroke, hundreds of pages of call prices will be reduced to a single per-minute rate Access Charge per tariff for all of these calls. This figure will allow easy comparison between different tariffs.

The other major change is calls to 080 numbers becoming free from all mobile phones.

Ofcom is also working towards eliminating the price differential for calls made to landlines and mobiles by reducing the Mobile Termination Rate.

Xac XeneX says:
6 February 2015

Reason BT wholesale their services to other broadband networks is that the British tax payer paid for the telephone network when it was a public company. Virgin Media cannot be forced to wholesale their network as they paid for it themselves, multiple cable companies invested the money then through acquisition became one.

Next I expect to see an announcement that Vodafone had bought Liberty Global which will mean it will be the owner of Virgin Media as Vodafone want a slice of the lucrative British fixed line telephone, and broadband market plus TV services too.

I agree with what XeneX wrote, but I disagree with the “framing” by politicians in the popularly used terminology of the nature of companies. In reality, a “public company” is one in which members of the public can buy shares and propose motions and vote at shareholders’ meetings. Hence Public Limited Company, PLC.

“Private company” is one in which there are a limited number of shareholders and new people can only buy shares by agreement with the existing shareholders. This small group can select how much is paid out as dividend and how much is retained within the company.

In both instances, shareholders’ liability is limited to the capital that has already been put in. If this limit was not present, no one would do anything as they would be risking their entire life’s savings and future earnings if they did and it went wrong.

Thus a nationalised company is one that is private, not public.

It has one shareholder, ie the government. That shareholder can dictate what the dividend is and how much profit is paid back into it. In many instances the government often failed to retain enough profit on a regular basis, and yet appeared to be a benefactor when it made grants to support an apparently failing company.

There are some cases where competition is silly, as there is only one resource, such as the RF spectrum. This is clear when one realises that at a particular location you can’t get a signal from provider A whereas provider B has a strong signal, and no roaming is permitted, or at least not at an affordable price. Supply of electricity, gas and water — in fact anything over a grid system – is another instance where a national company makes sense.

Brian P says:
6 February 2015

I took on a contract with Vodafone for 2 years and I have a problem getting a signal most of the time.I will be glad when the contract ends and get free of these people.All they are interested in is taking your money irrespective of whether you can use the service or not.

Jeff says:
6 February 2015

BT have won wooden spoon award from Which twice and have been in the national newspapers a number of times for poor service. I tried to contact them for service, but each time this recorded message was played ‘Your call is important to us, but we are very busy….’. This I tried anytime of the day an night same response. I do not know why they were never given a hefty fine for such troublesome service. Finally I telephoned OFCOM and they gave a a complaint number and a separate tel. number. When I called that number, it seemed everybody in BT moved at the same time,no time was wasted to fix my problem. I also had billing problem with them and they had to refund tto me £124.