back to article Three: We won't hike prices if you say yes to £10.5bn O2 merger

Three has promised it will not raise prices for customers if it is allowed to hop into bed with O2 in its proposed £10.5bn in an open letter hitting back at regulators' fears over the deal. In the letter, Hong Kong-based CK Hutchison, which owns Three UK, promises it will not raise the price for consumers of a voice minute, a …

  1. Anonymous Coward
    Anonymous Coward

    Consumers Vs Business

    So Three aren't going to raise prices for consumers (Hurray!) but what about business customers? Are we going to get shafted instead?

    1. Warm Braw Silver badge

      Re: Consumers Vs Business

      In the broadcast business, there is now effectively only one supplier, Arqiva, regulated by Ofcom as a monopoly. Much as BT Openreach is pretty much a monopoly in the fixed line business. In the end, you'd get a much better use of spectrum (as well as lower infrastructure costs) if there were only one operator in control of the transmitters. However much you try to create competition, these things are in the end natural monopolies. Perhaps it's better to think of more effective ways of regulating them rather than waste time fighting the inevitable.

      1. Graham 32

        Re: Consumers Vs Business

        @Warm Braw

        I agree with the natural monopoly bit in reference to Openreach. The physical network is expensive to build and so a huge barrier to entry for competitors. But services on the network have a much lower entry cost *if* getting access to the network is a level playing field. Hence all the fuss about making Openreach truly separate from BT.

        How about O2 and Three can merge only if the network (masts, backhaul etc) is spun off as a separate, truly independent company. None of this "we keep control and make vague promises about 'other meaningful competitors'" crap which will just give us another BT situation the public will spend 30+ years complaining about.

        1. A Non e-mouse Silver badge

          Re: Consumers Vs Business

          How about O2 and Three can merge only if the network (masts, backhaul etc) is spun off as a separate, truly independent company

          I don't know about Three, but I know that O2 don't own or run their own mobile phone network. That was handed off to someone else (Arqiva?) some time ago.

          1. Anonymous Coward
            Anonymous Coward

            Re: Consumers Vs Business

            "O2 don't own or run their own mobile phone network. That was handed off to someone else (Arqiva?) some time ago."

            Wasn't it that O2 and Vodafone set up a JV (Cornerstone) to run the mast network? Arqiva come into it somewhere too. It's complicated.

            http://blog.vodafone.co.uk/2012/11/20/better-coverage-fewer-masts-your-complete-guide-to-our-network-joint-venture/

            So, what customer improvements have been observed as a consequence of this glorious announcement?

            http://www.theregister.co.uk/2015/08/19/vodafonica_cornerstone_missing_uk_coverage_target_report/

            Apparently they missed their own specified coverage target. Wonder what the penalty might be.

            1. A Non e-mouse Silver badge

              @A/C Re: Consumers Vs Business

              what customer improvements have been observed

              You really think this is all about customer improvement? It's more about lowering costs for Vodafone & O2.

    2. paulf
      Unhappy

      Re: Consumers Vs Business

      It isn't a given for Consumers either, really.

      Three may promise "not to raise prices" but what happens if they do? What happens if they make a change like allowing RPI increases mid-contract? What happens if they reduce your contract allowance? Your monthly price hasn't risen and the price you pay for out of bundle minutes/texts/MBs hasn't increased per-se as these these aren't split out from the monthly bundle cost, but you get less for the same cost so it's a price rise in effect.

      What sanctions will be available to TPTB if Three either blatantly or stealthily breach their wide ranging (and potentially vague) promises? Mass compensation to customers? An unwinding of the merger? Or a dicky fine, paid to OFCOM, and all agreed behind closed doors with back patting and doubles all round?

      The problem with promises is they assume there's someone effective monitoring and policing* them with an arsenal of painful sanctions available** once they've got the big and mostly irreversible prize of closing the O2 acquisition.

      Assumptions:

      * they have the ability to get all the necessary and company confidential data to monitor them

      ** they're prepared to apply those sanctions

      I can't help thinking that the only outcome from this merger is that everyone will get shafted more than they are at present. EE and Voda will face 2 competitors rather than 3 so they'll have less incentive to avoid raising their own prices, regardless of what O2+Three claim they're doing with not increasing prices.

      1. Anonymous Coward
        Anonymous Coward

        Re: Consumers Vs Business

        What sanctions will be available to TPTB if Three either blatantly or stealthily breach their wide ranging (and potentially vague) promises?

        If you expect OFCOM to do anything, there is no hope. But if the Takeover Panel can be allowed to adjudicate on the promises that Three make, then there's a very good chance that they can at least be held to the letter of their promises.

        After Kraft blatantly made promises it then reneged on after the City sell out of Cadbury, the takeover code was tightened. There are, unfortunately still some cop-outs, but if the make and break a clear promise, then they can be forced to honour it by the Takeover Panel.

  2. djstardust

    Ha bloody ha ....

    After kicking millions off the One plan last week to another tariff at twice the price. Timing is everything.

    They also said they wouldn't introduce RPI price increases mid contract and then surprisingly changed their mind.

    Three need a kick in the butt. Their PR division with #makeitright challenging the mobile industry is a complete joke and totally ironic given current circumstances. They need to challenge themselves.

    Their Feel at home service is throttled to death for Youtube, Spotify, Google Play, Maps etc. as the traffic is fed back to the UK and monitored and feels nothing like at home at all. But if you do a speed test on the local networks (which they blame for this) it all looks fine. Hmmmmm

    Bunch of chancers (or should I say muppets)

    They were the cheapest of the big networks, but not any more. Filling the coffers for the O2 merger methinks.

    1. This post has been deleted by its author

    2. Graham Triggs

      Re: Ha bloody ha ....

      "Their Feel at home service is throttled to death for Youtube, Spotify, Google Play, Maps etc. as the traffic is fed back to the UK and monitored and feels nothing like at home at all"

      Performance is an issue - sometimes it is fine, others it is impossible despite having good 3G receiption. It certainly isn't "throttled to death", but patchy, yes.

      That said, the same can be said about the UK network - try hanging around Royal Festival Hall in the middle of the day and getting data.

      However, for something that is essentially free (try beating £17 for unlimited data in the UK, never mind any roaming benefits), it's pretty good. I mean, what is the alternative? If I was on any other network, I would have data roaming turned off completely, and severely restricting use of phone.

      RPI price increases is a bit shoddy - I'm not familiar with the full details, but if you entered a contract with a promise of no RPI increases, then they should be honouring that until the end of the contract minimum period at least.

      Unfortunately, plans do change. People have been able to keep The One plan for a long time after it was withdrawn. Maybe they could do more to help transition people thouigh - for example, allow you to choose a lower price plan, but give you an extra perk. E.g. choose to have limited minutes / texts and unlimited data, but allowing tethering as an additional free perk.

      Three will always do things we don't like from time to time. But go ahead and name another mobile network that hasn't.

  3. StephenD

    Meaningless promise

    Putting aside the poorly timed decision (from a PR point of view) to turf people off old contracts, the costs of mobile comms have consistently fallen, and it would be reasonable to expect them to continue to fall (notably cost per GB of data - it's not that long since prices were quoted per MB). To promise that the prices won't rise is therefore an easy promise to make, and pretty meaningless.

    With three rather than four main players, there will tend to be less competition and prices will be higher than they would otherwise have been, even while they continue their downward trend.

    1. Velv

      Re: Meaningless promise

      Much as I agree with you, perhaps AWFLCOM need to do more to open those three physical networks up to more MVNOs. Then the market place for customers opens up

      1. paulf

        Re: Meaningless promise

        I'd like to agree with you but those MVNOs will face the same problem with respect to choice and competition for their business: three options rather than the current four. Also an MVNO only has real control over the retail part of the monthly payment, limiting their scope for competitive pricing, whereas the retail operation of an MNO has influence over the retail and wholesale/network sides.

        Even then it isn't that clear cut:

        O2 seem amenable to MVNOs but they like to have an equity stake in them (Giff Gaff 100%, Tesco Mobile 10%)

        Vodafone don't seem that interested in the MVNO market; as Sainsbury's mobile customers have found out. I can't see that changing unless there was external pressure and it's not clear why Voda should face increased regulation because two of their competitors have merged.

        EE seem quite amenable to MVNOs (Virgin Mobile, BT) but whether that continues under their new overlords is yet to be seen. BT's not been overly keen on things like LLU.

        A quick look at this list shows Three hasn't got much MVNO business - whether this is because they're not amenable to them or their network isn't of interest to MVNOs isn't clear:

        https://en.wikipedia.org/wiki/List_of_United_Kingdom_mobile_virtual_network_operators

        TL;DR - more MVNO activity isn't likely to be a serious solution

        1. A Non e-mouse Silver badge

          Re: Meaningless promise

          A quick look [...] shows Three hasn't got much MVNO business

          My impression of Three is that their focus is/has been on the domestic customer. They've shown very little interest in the business market (Direct or MVNO)

        2. Roland6 Silver badge

          Re: Meaningless promise

          Re: MVNO's on Three

          This was something the EU demanded 3-IRL took take action on when it approved their takeover of O2-IRL. From memory, when Three-UK originally bid for O2-UK it said that it would be taking the same actions. It is noteworthy that Sky, who announced a deal with O2 last January, have now come out in support of the Three-O2 deal, which would indicate that it's negotiations with Three have completed satisfactory.

          I suspect there is little more Three can offer and the EU reasonably ask for, given what was agreed for Ireland. So Ofcom are looking like they are lining up for a bloody nose...

          1. Captain Queeg

            Re: Meaningless promise

            "It is noteworthy that Sky, who announced a deal with O2 last January, have now come out in support of the Three-O2 deal"

            Granted, but surely Sky have skin in the game. If someone, three/O2 or anyone else can up the pressure on BT Sky will be all for it. Sky's negotiations with three probably don't matter that much in the wider game. And if Hutchison float part of the enlarged network I've every expectation Sky would be up for a trade investment with Hutch running the infrastructure and their own retail.

            I imagine Sky like the idea of three's data capability and O2's reach to make their upcoming virtual network more compelling to sell as quad play to see of BT TV and Broadband.

            1. Roland6 Silver badge

              Re: Meaningless promise

              Yes it will be interesting to see what TalkTalk have to say, given their 4G deal with Telefonica/O2-UK.

              Looking at the O2 MVNO's and the lack of Three MVNO's, I do wonder if some are viewing this as if it were the other way round, namely a takeover of Three-UK by O2-UK...

        3. Anonymous Coward
          Anonymous Coward

          Re: Sainsburys Mobile RIP?

          I'm a frequent visitor to two different Sainsburys in two very different parts of the country (greater Birmingham, Lancashire) and the first I heard of Sainsburys Mobile was the "closing down soon" signs in the shops. Maybe the problem wasn't Vodafone, or are there other signs elsewhere?

          1. Soruk

            Re: Sainsburys Mobile RIP?

            Don't forget another recent-ish demise of an MVNO, Ovivo. They were also a Vodafone MVNO.

            1. Anonymous Coward
              Anonymous Coward

              Re: Sainsburys Mobile RIP?

              "Don't forget another recent-ish demise of an MVNO, Ovivo"

              Ovivo weren't your standard MVNO though were they, they were yet another attempt at monetising a service assuming the service itself could be funded by ad-flinging (previous attempts have included "free" telephone calls or "free" internet so long as you listen to or watch adverts every few minutes). Others have tried, none I can remember have succeeded.

              Plenty of MVNOs have managed what Sainsburys Mobile appear not to want to do, not least Asda and Tesco... ahh, turns out that Sainsburys Mobile wasn't just an MVNO, it was a JV between Sainsburys and Vodafone, and Sainsburys and Vodafone couldn't agree on where to go next. Whoops.

              Be interesting to see where Lebara are in 12 months time :)

  4. 2460 Something

    Like anyone can trust a big corporation to tell the truth about the real impact any merger may have. Their primary concern is profit, so prices won't rise for 5 years. Who cares? 5 years is short term planning, medium to long term they know they can safely increase prices and maximise their return on investment. Having fewer operators is never good for competition.

    It's exactly the same as BT saying 'splitting up BT from openreach would be detrimental to the UK market.' No, the only ones it would be detrimental to are BT.

    1. Anonymous Coward
      Anonymous Coward

      "No, the only ones it would be detrimental to are BT."

      It'd be pretty harmful to Virgin. It might well end their days as a network owner in the UK.

  5. Neill Mitchell

    They might not raise prices...

    But they will definitely switch off masts to save cash once they merge. EE did this leaving lots of customers with little or no signal.

  6. TRT Silver badge

    Prices are only one part of the equation.

    They might, say, introduce a slightly more expensive tariff and cut back on the services offered under existing ones. If they put a floor on the contracts... that's a different story - no price rises, no reductions in benefits.

    1. Adam 52 Silver badge

      Re: Prices are only one part of the equation.

      It's not even that good if the article has its facts right, they say that they won't raise call or data charges *not* subscription prices.

      Three wouldn't double package prices, would it? Like they did last week?

  7. Hein Behrens

    What about dropping prices?

    So if they freeze the price then no dropping prices?

    1. John Tserkezis

      Re: What about dropping prices?

      "So if they freeze the price then no dropping prices?"

      Seriously, what are the odds that carriers are going to drop their prices out of the goodness of their own hearts?

  8. Badvok
    Meh

    Less competitors = lower auction revenue = lower network costs = lower consumer prices or higher margins, take your pick.

    It's certainly obvious where Ofcom stand and it is NOT on the side of the consumer.

  9. Drefsab_UK

    hmm I must be lucky still on my sim only plan unlimited data, 200 mins 5000 text's £12 per month, on a monthly contract.

    1. leexgx

      you may find in the next month or 2 that you might lose it

      it depends what your real plan is + discounts (as yours is likely the AYCE plan not "the One Plan")

      as mine is £25 "The One Plan" with a rolling £2 and £5 monthly discount and i have not lost it or had an email or letter to say i going to lose it (i can get the AYCE plan for £15 so they lose £2-3 if they try to push me onto the £30 plan)

    2. BrownishMonstr

      I've felt like changing my sim-only plan to a contract with a phone. But then after looking I've felt better off with my £9 plan with 1GB data, 600 minutes and 3000 texts. There was a £3 a month add-on for unlimited data without tethering (I think) which increased to £5 last time I checked, but I'm normally under my allowance. The contract was originally £12 but I rang them to leave my then £10 contract and switch to Tesco, but they gave me this offer. It must have been a year or two now since it's been on-rolling.

  10. Anonymous Coward
    Anonymous Coward

    O3

    Will O2 become O3? The new O-zone (gedit?)

  11. Big_Ted

    Oh how some are blinkered/biased in their comments

    Three made the changes to the one plan a year ago and stated then that anyone already on it would have their contract terminated and offered a different one instead.

    You have had about a year extra on it and you complain it was only announced last week. You need the data ? then go with BT mobile and use their unlimited wifi for your needs and you get a better coverage at the same time. Otherwise go look elsewhere for what you want, its a free market.

    As to the merger I can see no difference between 2 big and 2 smaller companies or 3 big companies as far as competition is concerned, No way will EE and Vodafone increase prices in a big way if 3 are not as they would lose customers,

  12. Franco Silver badge

    I had an O2 business phone for 5 years and have to say the signal (broadly) was better than I have on 3. OTOH I pay £6.90 a month SIM only to 3 (500mb, 5000 texts, 200 minutes). If they could combine the 2 with possibly a small increase in price for 1GB data then I'm quite happy. Having the option to tether again might be useful too, don't use it often but nice to have. That tariff has been discontinued but no word on me being moved so far.

    Not going to say they're perfect, but in general I've found 3 to be fairly transparent and fairly helpful, at least relative to the other networks I've had to deal with.

    1. Triggerfish

      I have to say 3 customer support is actually pretty good after Orange, I hope the merger doesn't cock it up.

      1. Anonymous Coward
        Anonymous Coward

        I hope the merger doesn't cock it up.

        Much to learn you still have, young padawan.

        1. Triggerfish

          Not really, you could describe me as a hopeful cynic. I always hope it will be better, I know it won't.

  13. Cynical Observer

    Keeping a watching brief

    SWMBO got the letter last week - the One Plan which was £15 after discounts was being withdrawn and their proposed suggestion was twice the price. After a call where she firmly but politely told them that this was not acceptable - a new plan was agreed at £14 pcm (Manager discretion is wonderful!). The data allowance is still generous - 4 GB pcm where she's had an actual max usage in the last six months of 2.7GB

    The threat of taking all the family contracts to another provider seems to have worked.

    I'm still waiting for my letter - not received and I'm not asking them for it. They cannot change the tariff without the thirty days notification -- at which point, I have the rest of the family contracts as leverage for a decent deal.

    To their credit, one thing that Three do for free is their Home Signal box. We have zero signal indoors and Three do the box for free - the other providers either charge (circa £80 according to some reports) or suggest that you use an App to fudge getting over the lack of signal. In itself, that makes Three stand out over the others when everything else is comparable.

    1. david bates

      Re: Keeping a watching brief

      I've only ended up paying £4 more than my one plan, and thats for double the data and minutes I usually use in a month. Still not as good as the unlimited I had but 3 are the best of the providers I've tried (Orange, O2, GiffGaff (shudder))

    2. chipxtreme

      Re: Keeping a watching brief

      I'm also on the One Plan @ £15 pcm and so far have had no contact or letter from 3 to tell me I have to come off it, but my mate who took out a one plan @ £20 a short while after me has received the letter.

      In response to the signal box, in a previous property I had zero signal and it was before ThreeInTouch was on the market and they charged me £50 for my signal box. They later replaced it with a newer black one for some reason.

  14. Roland6 Silver badge

    I think the final quote from Ernest Doku contains the real concern: " there is a real risk this merger could ... reduce the incentive for networks to undercut each other, and lead to less innovative propositions."

    However, given that such undercutting is generally at the expense of something else, my feeling is that with three operators, Ofcom could be more forceful in its demands for coverage etc.

    1. Anonymous Coward
      Anonymous Coward

      Ofcom could be more forceful in its demands for coverage etc.

      And your view of the probability of that happening?

  15. KaiserMCG

    They took over O2 here in Ireland last year and it didn't work out so well for customers..

    - Former O2 customers have seen their signal quality and strength fall significantly. They also weren't granted 4G until relatively recently

    - 3 scrapped the O2 Money Card replacing it with a more expensive/less competitive product

    - Customer care with 3 is.. "not good" to say the least

  16. Anonymous Coward
    Anonymous Coward

    Numbers and scale

    I don't think the number of operators matters as much as their scale - having 20 operators mean none of them can scale. That isn't good for customers as they do reach a point where they cannot reduce prices without compromising on the product itself - where coverage and reliability would rule I would think.

    So if it's just about prices and the number of operators, it would be a race to the bottom. As a person alluded to MVNOs do cover that. Operators today are improving the quality and that isn't being fixed.

    A lot of people here comment that EE raised their prices. But I'd argue that's because they're offering a better product allowing them to charge more. They also have improved their offering vastly over TMob and Orange. (on data and coverage). Neither Tmobile nor Orange offered this before. For price conscious customers, MVNOs on their infrastructure are much cheaper while ensuring good spectral use. Voda and O2 are great for voice calls, but they are pretty bad for data, with far lower cell capacity and aren't that competitive. They both crutch on their business customers. EE and to some extent 3 are the ones who offer reasonably continuous data coverage on rail and key road links. Voda and O2 still only really do voice properly.

    Bigger isn't always blindly worse! For me personally the merger would result in a better product. Ofcom simply passes the buck off with coverage obligations, but I don't see active steps to improve the quality of comms. Four operators today or five operators before did not offer this. I think lowering prices is only one aspect of a competitive market.

    There are other levers such as MVNO's and mandatory national roaming perhaps based on spectral hoarding. Pebble shows it's possible, they today price it in.

    So if it's all about competition, why is Ofcom going public with informal commentary. I'm wondering if this means the merger is happening and this is all just theatre.

  17. Anonymous Coward
    Anonymous Coward

    Of course they won't raise prices if they merge. They're doing it already - double the price for what used to be an all you can eat package and migrated to it or F'off somewhere else!

    Yes Canning, that would be excellent for competition! Also for CKH's already vastly swollen coffers.

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