European Communications – Q&A: Northstream CEO Bengt Nordstrom

Bengt Nordstrom, Head of telecoms consultancy Northstream, discusses the proposed O2-Three UK merger

Eurocomms.com: UK regulator Ofcom has voiced a number of concerns about the proposed merger between O2 and Three. Are they right to say that it would lead to higher prices for consumers?

Bengt Nordstrom: No – it is more hypothesis than fact. There are studies that point to price increases after consolidation, but having seen these studies, my opinion is that they are more like snapshots and miss out on important macro level aspects of price trends.

For example, the long-term mobile industry trend is a 30-year journey from growth to stagnation and even declining revenues for operators, which is the key driver for consolidation.

Then there is the cyclic price and investment trend of the industry. When you look at pricing trends you have to consider if you are taking measurements during the launch cycle of a new technology, when prices typically go up because of more added value in the offering.

Finally, unlike other utility services – such as water, gas or electricity, where customers are buying exactly the same product annually – it is not a given that prices for telecom services must always fall.

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