European antitrust regulators have begun scrutinising the EU's big five mobile operator groups over their collaboration on standardising services.
Everything Everywhere co-owners Deutsche Telekom and France Télécom are among the five operators under scrutiny. Image credit: Karen Friar
The fact-finding exercise could lead to formal antitrust proceedings, but the European Commission says its request to operators does not necessarily mean it has competition concerns yet. It has asked Deutsche Telekom, France Télécom, Telefónica, Vodafone and Telecom Italia to explain what they have discussed in meetings over the last two years, reports suggest.
"The Commission can confirm that it has requested information from five large telecom operators... and from the GSMA, the mobile operators' association," the Competition Commission said in a statement on Wednesday. "The requests for information relate to the manner in which standardisation for future services in the mobile communications area is taking place."
"The Commission has not opened formal proceedings. These fact-finding steps do not mean that we have competition concerns at this stage, nor do they prejudge the follow-up," it added.
Deutsche Telekom and France Télécom are the co-owners of Everything Everywhere, which runs under the T-Mobile and Orange brands in the UK. Telefónica is the parent of O2, and Vodafone also has British customers, leaving Telecom Italia as the only one of the five without a presence in the country.
Citing confidentiality, the GSMA refused to comment other than to say it had received the correspondence from the competition regulators and will respond "in due course".
According to a Financial Times article (behind a paywall) on Tuesday, the Commission's request for information stemmed from so-called 'E5' meetings held between the operator groups since 2010, and recently brought in under the auspices of the GSMA.
The first meeting, in October 2010, apparently resulted in a joint letter to digital agenda commissioner Neelie Kroes, complaining about the bandwidth requirements of US web companies' services.
Europe's mobile industry has recently been speaking with an increasingly united voice. Vodafone chief Vittorio Colao angered Kroes at last month's Mobile World Congress by asking, seemingly on behalf of operators in general, for a regulatory holiday.
Colao called for Kroes to take a break from imposing further data-roaming price cuts and mobile termination rate caps on the operators, resisting industry consolidation and "building funny [spectrum] auctions which are designed to extract more money from existing operators". He said a failure to allow this regulatory holiday would result in lower investment by "the industry".
Kroes replied by saying she does "not respond well to threats".
The lack of real competition between the big operators has been a key factor in Kroes's proposals — recently backed by MEPs — to impose not only retail price caps for data-roaming services but also deeper structural changes that will ensure smaller operators can undercut their bigger rivals.
The Commission's Digital Agenda team has repeatedly pointed out that price caps on their own do not seem to create competition. This is because all the big operators tend to cluster their prices at maximum allowed rate, rather than trying to compete with each other on offering the lowest prices, it argues.
ZDNet UK's own investigation of data-roaming charges last year revealed that services only cost around a penny per megabyte to provide, but high mark-ups imposed at the wholesale level by the operators with the biggest coverage leave smaller rivals unable to offer cheap rates to their customers.
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