Virgin signs ‘full MVNO’ BT deal despite earlier competition warning

Virgin signs ‘full MVNO’ BT deal despite earlier competition warning

The UK’s oldest MVNO Virgin Media, has signed a new five year agreement with BT to give Virgin full MVNO status, meaning they are now responsible for managing the service they provide.

 

Full MVNOs have greater ownership over their customer base by supplying their own SIM cards with their own number allocations from Ofcom. They also control the call, sms and data exchange interfaces which would otherwise be handled by the network or by an MVNE. The advantages for an MVNO in changing over to this status include being able to offer highly customised tariffs and very competitive rates.

 

This represents a change of hearts over at Virgin Media, who opposed the BT and EE merger, on the grounds that they would squeeze MVNOs like Virgin out of the market. The executive summary of their statement against the merger read, ‘The CMA has explicitly acknowledged that, should customer demand for combinations of fixed and mobile services develop in a way that is consistent with BT's strategic vision, "the merger might change EE’s ability and incentive to harm MVNOs which would compete with the merged entity across mobile and fixed services.”

 

‘Such a change in incentives is of particular relevance for fixed-MVNOs which would be the primary sources of competitive constraint on the merged entity for customers who want to purchase fixed and mobile services from the same provider…

 

‘Virgin Media therefore strongly disagrees with the provisional finding that the Proposed Transaction should not be expected to result in a significant lessening of competition as a result of a foreclosure strategy by the merged entity in the wholesale mobile market.’

 

When Mobile asked Virgin why they agreed to the deal despite these competition concerns, a Virgin Media spokesman explains, ‘Our comments relating to the merger of BT/EE were given in response to the CMA’s call for inputs. The acquisition was approved and the market moves on. We have consistently been focused on offering our customers the very best mobile service. Our new agreement with EE helps us to achieve this.'

 

BT CEO of wholesale and ventures, Gerry McQuade, said: ‘This has proven a successful relationship for both parties for many years and, as we enter a period of further technological change in the mobile market, we are very pleased to renew and extend our 17 year old relationship. As the largest wholesale provider of telecommunications services in Europe, BT values the economy of scale that Virgin Media brings to our network.’



Virgin Mobile MD Peter Kelly, said: ‘This winning combination with EE will give Virgin Mobile even more control and firepower to deliver innovative services to the UK mobile market. Virgin Mobile customers want fast speeds, flexibility and plans packed full of data - we’re going to continue to deliver.’

 

Virgin Media elaborated by telling Mobile that the deal will enable them to launch more fixed-mobile converged offerings.

 

The announcement of the new agreement also puts an end to industry and City rumours that Virgin was looking to migrate their service over to another provider following EE’s acquisition by Virgin’s arch rivals in the TV and broadband market, BT.

 

In moving to full MVNO status, Virgin Media worked with Huawei, with the company explaining,‘Virgin Media realised that to remain competitive and relevant in the digital world, they needed a transformation programme that would empower them to fully manage customers by moving from a light MVNO to a full MVNO.

 

‘Huawei and Virgin Media jointly embarked on transformation journey to design and build a world class fixed-mobile convergent (FMC) business. Choosing Huawei as the Prime System Integrator (PSI) to lead on business (process & organization) and technology (network and IT) change has delivered Virgin Media’s best transformation ever.’

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