In a generally unregulated market, the regulator is concerned about high prices and lack of competition
A market that has been deregulated for a long time across Europe: The European Commission has blocked the decision of the Czech authority, the CTU, to regulate the market for wholesale mobile access and call origination. This market was removed from the EC’s list of relevant markets in 2007, and only a handful of countries continued to regulate it. Recently the Czech regulator was concerned about high retail prices and MVNOs not being able to compete with MNOs. Accordingly, in 2019, the CTU included the market among those susceptible to ex-ante regulation (against the opinion of the EC at the time). That decision did not designate any operator with SMP, but paved the way for this latest market review.
The CTU tries to bring back ex-ante regulation: In the review of the market in 2021, the CTU did propose to designate the country’s three MNOs (O2, T-Mobile, Vodafone) with joint SMP. Whilst 133 independent MVNOs operate in the country, these have had a limited impact on the retail market with a cumulative market share of only 2%. The CTU believes this is due to unfavourable conditions at the wholesale level, with lengthy negotiation processes and wholesale prices consistently higher than retail prices. The regulator also believes that the current market structure can lead MNOs to tacitly collude. In view of these findings, the CTU proposed access obligations on the three operators, including price controls.
The EC wants a more forward-looking approach: The EC disagreed with the CTU and opened an in-depth investigation in December 2021. The EC believed there was insufficient evidence of tacit collusion, and that the CTU didn’t take into account the likely future evolution of the market. Following the 5G auction of 2020, two new operators (CentroNet and Nordic Telecom) acquired spectrum in the 3.4–3.6GHz band, and were granted national roaming using O2’s 700MHz spectrum until 2029. The market could therefore become more competitive soon. The EC also notes that retail prices, while high, are already falling.
Several national regulators are concerned about prices and competition in their markets: The EC’s decision has been met with disappointment by the CTU, which will consider further steps to ensure lower prices for consumers – although it’s not clear what these could be at this stage. The disagreement between the CTU and the EC fits into a pattern of national regulators expressing concern about the risk of high retail prices and anticompetitive behaviour in mobile markets. This is also becoming apparent in regulators’ position on mobile mergers, with national authorities generally wary of possible anticompetitive effects while the EC appears now more open to consolidation than in the past.
