The German housing industry warns that the planned acquisition of Unitymedia by Vodafone will significantly reduce competition and increase consumer costs for TV, internet and telephony.
“The EU Commission has rightly expressed massive competition concerns to the parties involved in the merger in areas including fibre-optic network deployment, internet and telephony as well as TV signal delivery to apartment blocks. Vodafone’s current commitments largely ignore these remarks and are economically worthless,” Axel Gedaschko, president of Germany housing association GdW, said in Berlin.
In principle, Vodafone offered two commitments to the Commission. Firstly, the company wants to open its cable network for telephony and internet services provided by Telefónica. Secondly, Vodafone wants to commit itself not to restrict TV broadcasters from distributing their content over the open Internet (OTT) and to design the network gateways to the Vodafone network in such a way that sufficient distribution capacities are available.
“This simply does not address the Commission’s fundamental objections”, Gedaschko criticised. For example, the network opening offered exclusively to one provider would “not even slightly meet” the Commission’s concerns in the area of internet and telephony. Instead of the incentives demanded by the Commission for more competition in the internet and telephony sectors and for faster fibre-optic deployment, the offer would have the exact opposite effect. The sales partnership between Vodafone and Telefónica on the Vodafone network would only be positive for the parties directly involved, but not for consumers and competition. If the merger was approved on this basis, the remaining competitors would be squeezed out, leaving only Deutsche Telekom and Vodafone as network operators in the long term, argues GdW.
Gedaschko is particularly disappointed that not a single commitment addresses the negative competitive effects of the merger in the market of TV signal delivery to apartment blocks. There was a danger of Vodafone monopolising the market, which would lead to higher prices and poorer services for the housing industry and its tenants. The contract partner chosen by Vodafone would not change this as it plays no role in this market. The promises in the OTT area are to be welcomed in principle, but in the long run they are a matter of course and insignificant for competition. “The consequence of the merger is a Vodafone that is even more powerful on the market and then operates nationwide,” said Gedaschko.
GdW does not consider Vodafone’s concessions to be suitable for fully compensating the competitive disadvantages of the planned takeover, Gedaschko stressed. “A serious commitment package must at least open up an opportunity to offset the disadvantages. The current offer from Vodafone to the Commission is light years away from this.”