Mobile deal concessions a face-saving ploy

It appears the European Commission is preparing to clear 3 Ireland owner Hutchison Whampoa's €850 million takeover of O2 Ireland, possibly as early as next Wednesday, almost four weeks ahead of a June 28th deadline.

The devil, as the old cliche goes, will be in the detail of the competition remedies that accompany the commission’s imprimatur.

What is already apparent is that some of the concessions made by Hutchison since it lodged its original set of remedies are just meaningless items of window dressing, and are designed solely for the commission to save face.

The commission’s main concern all along about the takeover was that it cut the number of mobile network operators in the State from four to three. This seemingly illogical stance totally ignored the fact that Ireland’s tiny mobile market has only ever supported three network operators. 3 Ireland has never made a red cent – the market never supported the number four player. The deep pockets of its Hong Kong parent Hutchison did that.

Hutchison originally offered to open up 3's infrastructure to an MVNO network-piggybacking arrangement for cable operator UPC. This wasn't enough for the commission, because an MVNO is not a network operator.

So, to mollify the commission, an option for a silly “glide path” to potentially turn the UPC MVNO into a full network operator – by selling it spectrum – was tacked on to the plan.

To make it sound plausible, it was agreed UPC would buy a ready-made customer base of about 50,000 accounts from O2.

This concession was meaningless. UPC does not want to be a mobile network operator. The “glide path” option will never be taken up by UPC, and everyone knows it. The cable operator only wants some form of mobile offering so it can bundle it with its TV and broadband services.

But it allows the commission to point to the possibility the number of Irish network operators could potentially grow from three to four again in the future. An Irish solution to a European problem.