Enabling consolidation, scrapping spectrum licence fees and departing from EU net neutrality rules were all highlighted as priorities for the sector
Consumers have never had it so good: On 7 March 2023, Assembly joined industry peers to discuss next steps for the UK’s mobile sector, including priorities for operators and policy. In setting out its future approach to regulation, Ofcom stated that consumers have never had it so good, with data consumption increasing 40% year-on-year as mobile prices have remained broadly flat (or even declined). Ofcom considered that competition remains the primary driver of investment, which has been largely constant over the past decade (unlike the ongoing ‘once in a generation’ rollout of fibre). The regulator acknowledged, however, the challenges facing operators, noting that Three and Vodafone have not been consistently profitable. With some operators due to implement inflation-linked price rises from 1 April, Ofcom stated that it is more concerned about transparency than the increases themselves, but added that in no other industry do consumers experience this kind of indexation.
Operators are facing a significant investment gap: For Mobile UK, falling prices have reduced the sector’s capacity to invest and policymakers must help narrow the funding gap. DMSL, the joint venture responsible for the Shared Rural Network programme, agreed that investment in mobile infrastructure is paramount and that further public financing was needed to meet one of users’ key priorities: availability. In Three’s view, the UK market is not conducive to investment, positioning the country as a ‘5G laggard’ and creating a disconnect between government ambition and reality. Telcos are facing a £23bn investment shortfall, while content and application providers drive up data traffic without contributing to network costs. Three called for the abolition of annual licence fees (ALFs) to free up capital to be employed elsewhere. techUK considered this proposal could support network investment, but that operators also need access to skilled labour to effect 5G deployments.
Consolidation seen as a win-win scenario: With Vodafone and Three-owner CK Hutchison still locked in negotiations, M&A was unsurprisingly a topic for discussion during the event. Three outlined consolidation as one its main asks of regulators, arguing it would deliver benefits for both competition and consumers. Three stated that a merged entity would have the incentive to price aggressively, with the transaction also reducing the level of duplicative capex in the industry. BT was more tight-lipped, but did recognise the logic that the mobile market could have a more efficient structure. There was support, too, for proposed reforms to the UK’s net neutrality framework and a divergence from EU rules, which Cambridge Wireless saw as one of few potential ‘Brexit dividends’. However, as the ‘fair share’ debate rages in Europe, the association considered that directing tech firms to pay for telecoms network costs should not be a policy the UK follows.
