What is the right number of mobile operators for a country? Is there a correct number? An optimal number?
For years, Canada’s policy has been that the right number is at least four. In 2013, then Industry Minister Christian Paradis issued a statement saying “To be clear, our government wants to see at least four players in each market.”
For a dozen years, through multiple Ministers, and changes of ruling parties, the four carrier objective has been the guiding rule in Canada.
That was why I thought it was interesting to hear so many service providers in Europe calling for changes to regulations constraining consolidation. At Mobile World Congress in Barcelona, CNBC wrote “Tech ‘Please unleash us,’ Europe’s telcos urge regulators as industry bangs drum for more mega-deals”. The article quotes Marc Murtra, CEO of Spain’s Telefonica:
If we’re going to invest in technology, in deep know-how, and bring drastic change, positive drastic change in Europe — like other large technological companies have done in the US or we’re seeing today in China — we need scale. To be able to get scale, we need to consolidate a fragmented market like the telecoms market in Europe. And for that, we need a regulation that allows us to consolidate. So what we do ask is: please unleash us. Let us gain scale. Let us invest in technology and bring upon productive change.
CNBC said a number of CEOs of European operators said they would be able to compete more effectively with only three main players per market. The article said three is the model that has “become the standard in places like the US, China and India.”
In a keynote address to MWC, Tim Höttges, CEO of German telco Deutsche Telekom said, “if we cannot increase our consumer prices, if we cannot charge the over-the-top players, we have to get efficiencies out of the scale which we created.”
If jumbo sized markets like the US, China and India have consolidated to 3 major players per market, and European operators are claiming they need to consolidate to build scale for investment, one has to ask whether Canadian policy makers can continue to hold onto a magic number of 4 players in each market.