Three UK opposes UK NFC joint venture and stands up for consumers

Three UK calls out the UK NFC joint venture anti-competitive plans and moves to block the partnership with the European Commission

The mobile network operator Three UK (Hutchison Whampoa) is seeking to block the UK NFC joint venture entered into by Vodafone, Orange, O2 and T-Mobile. The UK NFC joint venture plans to create, run and control a common mobile payment and advertising platform for retailers. Three is arguing that the companies’ influence in the market would result in high fees for consumers. Three UK is attempting to submit a formal complaint that requests that the European Commission blocks the UK NFC joint venture. Three said they were already in talks with the European Commission before formally applying for approval later this year. Three UK will only be able to lodge a formal complaint when that approval is given by the European Commission.

“Instead of competing for the benefit of consumers, the three operators that hold 90 percent of the U.K. market have engaged in a cozy collaboration and closed ranks against competition,” Stephen Lerner told the New York Times.

We’ve voiced our opposition to major carriers creating NFC joint ventures and closing off markets to competition before. It’s bad business for the economies of the world and it creates an anti-competitive environment where MNOs rule supreme over aspects of consumers’ financial lives. This is questionable at best. We even profiled Vodafone in a post to show the sheer levels of influence the company is looking to exercise on a global scale which would put them in control of millions of consumers and their way to pay for goods and services as cashless societies become a reality. The UK NFC joint venture is just one example of this model.

The anticompetitive JV’s extend beyond the UK NFC joint venture

This situation is not exclusive to the UK and its UK NFC joint venture though. With many of these NFC joint ventures running with the same model all across Europe and even in the United States in the form of Isis, which is a collaboration of Verizon (Vodafone is a major shareholder), AT&T and T-Mobile US (Deutsche Telekom).

“The competition authorities in Brussels should not allow this type collaboration to go forward under any circumstances,” Mr. Lerner said. “Excluding the maverick raises serious competition concerns.”

Lerner said the operators would impose high transaction fees on British consumers and also said the venture could set a difficult precedent in Europe,where countries are beginning to grapple with the issues and ethical questions that are being raised by national wireless payment networks and it looks like that conversation starts with the UK NFC joint venture.

The UK NFC joint venture said they would “dramatically speed up the introduction of mobile advertising and payment services”  and positioned themselves as the only game in town that retailers, banks and card issuers would have to work with. The UK NFC joint venture also plans to deploy advertising and loyalty programs that again are managed by the MNOs UK NFC joint venture. Vodafone, O2, T-Mobile and Orange also plan to act as their own trusted service manager which would also add layers of control that could be used to keep competition like Three UK or Google Wallet out of majority of the UK market.

We mentioned that the UK NFC joint venture is constructed in a near exact model as its US cousin, Isis, and in the same fashion each of the three operators in the British venture holds an equal stake. “Together,the operators plan to invest £10 million to £50 million, or about $16 million to $80 million, to develop the technology and market it to retailers,” an employee for one of the companies involved who was not authorized to speak publicly told the NY Times.

“It made sense to bring their expertise and experience together to get the venture up and running as quickly as possible,before turning to the industry for further participation,” the operators said in their statement.

We didn’t leave Three UK out in the cold on purpose says the UK NFC joint venture

Amazingly, the UK NFC joint venture said that it didn’t exclude Three UK intentionally. It is hard to accept that the thought of the nation’s 4th largest carrier joining the exclusive old boys club didn’t even occur to the three heavy weights. In fact, if we were to speculate it would make sense for this exclusion to happen if the three MNOs intended to squeeze Three UK out of the market using anti-competitive tactics.

Another little fact worth exploring is in the point that the UK NFC joint venture failed to brand itself, but then proposed that the NFC Forum’s N-Mark branding wasn’t strong. It could be posited that the UK NFC joint venture didn’t name itself so that it wouldn’t have a brand to target with conjecture that called out its anti-competitive behavior.

Three’s exclusion from the UK NFC joint venture weakened its “ability to be a competitive force in the U.K.,” Lerner said.

Here at NFC Rumors, we are not so concerned about the exclusion of Three UK as we are in regards to what that means. Fair competition is being tactically hampered from trading in the UK, which includes internet-based services like Google Wallet and other NFC based payments, and loyalty competitors which would keep prices low for UK consumers. We also want the UK NFC joint venture to come clean on the actual levels of control that the three companies will have on consumers’ ability to pay for goods and services. Privacy issues also need a closer look. The 1974 Data Protection Act may play a part in Three’s complaint against the UK NFC joint venture.

So Google and Sprint, as far as Isis is concerned, is it a matter of if you can’t beat them join them? Or are you going to show that your open NFC platform promises to consumers are core to your services and fight the control Isis is likely to impose? Three UK has made a stand against the UK NFC joint venture and it will be interesting to see how that reverberates around Europe and North America.