Overview of Ofcom’s approach to analyzing its concerns

In the March 2011 Consultation Ofcom set out its approach to potential competition concerns in the light of the responses received. It is the aim of the regulator to promote future competition but at the same time the measures to be taken by it is regulated by its statutory duties and Directive requirements. Ofcom’s analysis in this regard consists of four steps. 1) Auction outcomes – It considers the spectrum distribution after the auction. Competition concern may arise if any one of the national wholesaler fails to acquire additional spectrum in the absence of measures to promote competition. 2) Ofcom considers the chances of the results arising from the bidder’s behaviour in the auction without measures in the auction. 3) Bringing together steps 1 and 2 of the analysis, Ofcom set out its views on the competition concerns.

Ofcom considered the magnitude of detriment to consumers that would happen as a result of the auction, the market and technical conditions contributing to this consumer detriment and also the chances of the wholesaler in question failing to acquire additional spectrum to avoid such a situation. 4) Ofcom has considered the measures that it should take to address these concerns and prepared its provisional conclusions relating to the appropriate and proportionate approach. Ofcom considered the advantages and disadvantages of particular options that consist of sets of measures that might address its concerns.

To denote a particular set of conditions which would make up a future scenario for the mobile services, Ofcom used the phrase “technical and market conditions’. Such a scenario would be affected by the prevailing market and technical conditions.

Recognizing that the competition assessment is relating to the provision of mobile services in the future, Ofcom has considered a wide range of evidence. The regulator has considered consumer’s behaviour, evidence relating to the results of similar auctions and spectrum holdings among competitors in other countries, technical description of the capabilities of macro cell LTE networks, technical research on the availability of future mobile handsets, research relating to the potential use of small cells and technical research on evolution of the standards for mobile technologies LTE and HSPA, for assessing competition. These data and evidence are not considered definitive or final but needed careful interpretation. This is because there may be inherent limitations to technical modelling or researches may be conditioned by current position or expectations. Anyway in spite of these drawbacks, these evidence and information helped the regulator in making the competition assessment.