Ofcom’s CEO Sharon White has told the mobile industry that the regulator needs to evolve with the market to ensure that it continues to be competitive enough for consumers.
White made the comments in a speech to the London School of Economics (LSE), warning that the regulator believes ‘that competition, not consolidation, drives investment and delivers low prices. ‘
The Ofcom CEO also attacked the idea that consolidation was necessary for networks to invest sufficiently in infrastructure: ‘They [communications providers] sometimes talk in terms of 'market repair', implying that the UK market has been too competitive. The companies also warn that a fragmented European sector makes it harder to compete against major players in the US.
‘Consolidation can in theory have benefits – improving economies of scale and making it easier to finance investment. However, Ofcom's experience is that competition, not consolidation, drives investment and delivers low prices. Our analysis of a dozen countries, inside the EU and beyond, shows no relationship between consolidation and investment.’
The speech addressed the European Commission’s decision review of the telecoms framework, stating that it was a necessary step to ensuring that the market was adequately regulated: ‘This is not about regulators seeking new powers for the sake of it, or regulatory creep. Rather it is a recognition that the statutory framework needs to evolve to deal with emerging challenges in a rapidly evolving sector.
‘Any new powers would need to be applied proportionately, and with care. Checks and balances should be built into the system to ensure that happens.’