Virgin Media has revealed the challenges MVNOs face in the UK market to the Competition and Markets Authority (CMA).
Speaking at the CMA’s hearing over the BT/EE merger, Virgin Media explained that gaining market share is difficult. Despite being the most established MVNO in the UK, it has struggled to claim a significant portion of the market.
The remarks follow comments made by Vodafone that it does not generate enough cash in the UK to invest in its own network.
Minutes from the hearing revealed: ‘Virgin Media said people were not queueing up to become MVNOs, and the number of serious MVNO operators was probably quite limited. In terms of the MVNO market, it was one of the largest MVNOs and it had been around for 17 years.'
Virgin Media explained that while a lot of MVNOs exist in the UK market, it is difficult to gain a significant market share. The company argued that it is not easy to compete in the market, claiming ‘the willingness of people to enter the MVNO sector did not mean that it happened’. The MVNO claimed that new entrants were mostly driven by competitive response, highlighting Sky as an example.
Virgin Media said: ‘Sky was clearly doing it because it saw that BT was going to do its own mobile deployment. Sky had described it in that fashion, as an offensive-defensive move.’
The MVNO, run off the EE network, also spoke to the CMA about its concerns regarding the BT/EE merger.
It has been widely debated that in the event of the merger being approved, EE would cease to exist, throwing into question the longevity of its relationship with the network.
The minutes revealed: ‘Virgin Media said it was the main fixed line infrastructure competitor to BT. The merger would see Virgin Media’s MVNO going into the hands of the company that it competed most directly with.’
Virgin Media’s concerns have been echoed by a number of industry rivals. Dixons Carphone submitted documents to the CMA claiming that a merged BT and EE would hurt market competition and choice, should the business be allowed to pursue a direct channel only strategy.
BT and EE have hit back at complaints also made by Telefonica, TalkTalk and CK Hutchison, fiercely contesting the notion that a merged business will affect competition.
Ofcom have come out largely in support of the pending merger, advising the CMA that any competition issues that arise from the acquisition can be tackled using the regulator’s existing powers.