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Mr Edward Vaizey MPMinister of State for Culture and the Digital EconomyHouse of CommonsLONDON, SW1A OAA

11th November 2015

Dear Minister,

I am writing you in regards to a very serious and time sensitive matter, on behalf of the tradeassociation for the competitive mobile ecosystem. Given your Government's commitment toempowering and equipping Small and Medium Sized Enterprises (SMEs), as well as supportingmarket innovation and consumer choice within the communications and technology sectors, I wouldlike to bring to attention; the Competition and Markets Authority's (CMA's) provisional finding of nosignificant lessening of competition in the proposed merger of British Telecommunications plc (BT)and EE Limited (EE).

Specifically the threat in the Provisional Findings (PF's) on which the CMA case panel was notunanimous. This split decision was in regards to the wholesale mobile market access which is criticalfor MVNOs. Indeed, as a matter of competition policy the government has provided a "MinisterialStrategic Steer" and innovation was identified as an important component in the "Ministerial Steer".We are concerned that the CMA's focus in its current findings on the wholesale market fails to fullytake into account the innovation MVNOs bring to the market, which would see an increase in marketforeclosure should the CMA's decision to go forward remain without any remedies to protect thewholesale market ."

Both consumers and SMEs in the UK benefit from having a wide range of communications providers,from the current 4 main network operators through to smaller independent companies and a varietyof MVNOs. In particular, SMEs often find the service provided by the smaller players is a bettersolution. This can be seen by the number of successful companies serving the SME sector; e.g..Gamma, which supports many of these independent providers, has over a hundred such partnerproviders alone. Smaller independents understand SMEs, often being SMEs themselves; they areable to tailor solutions and provide customer service that is closer to the users' needs.

The SME market has much higher Average Revenue Per User (ARPU) than the residential market sothere is a greater incentive for the network operators to acquire these users directly; consolidationrisks independent providers being squeezed out of the market or being mere resale "subsidiaries" ofnetworks. This is particularlv a cencern as combined fixed and mobile bundles become standard andwithout a competitive wholesale market and tile ability for Mobile Virtual Network Operators(MVNO_s)to compete on a level playing field, these risks increase.

Along with other industry bodies, The International MVNOx Association has been participating in thiscase, and the proposed 02/3 merger, sharing information and proposing remedies to the (MA andthe European Commission. However, we are concerned that the CMA has failed to understand thecomplexity of the market and that their Provisional Findings! may set us on path that will, withoutremedies for wholesale mobile access or simultaneous consideration of the 02/3 transaction, createa regressive, oligopolistic and hostile market for MVNOs in the UK - a market internationallyrespected for lts competition and innovation.

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In an industry where we have a range of business models including joint ventures like thesupermarket chains (Tesco and Asda), as well as fixed networks (TalkTalk, Virgin) which have theirown mobile network core, and unique consumer options (The Phone Co-op, The People's Operator)failing to recognise the complexity of the competitive landscape, also fails to acknowledge the truerange of competition that MVNOs provide, including the specialist business to business MVNOs. Inaddition, the CMA's conclusions presuppose an existing free and competitive market at wholesalelevel for mobile voice and data.

This is simply not the case in reality; the current state of foreclosure within the wholesale market inthe UK is far more serious than the CMA's findings have suggested, despite possession of detailedevidence showing these realities.

As an international association, we are deeply concerned about the precedent that will be set forother national markets and regulators as a result of the CMA's current reasoning should the mergerproceed without the aforementioned remedies. We fear that they have taken not taken intoaccount significantly releva~t information and this is concerning for the future of thetelecommunications industry both in the UK and across the world.

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