EU Regulators Approve UK Telco Joint Venture

The European Commission announced today it has unconditionally approved the creation of a proposed mobile-commerce joint venture by the three largest operators in the UK, Everything Everywhere, Telefónica UK and Vodafone UK.  This clears the way for an NFC-Based Wallet Platform.

The decision follows a rare in-depth investigation that EU antitrust regulators announced in April that they had launched into the proposed venture, dubbed Project Oscar, which would use NFC phones and SIM cards for many of the planned services.

The Commission said its preliminary investigation indicated “potential competition concerns” about the power of the three telcos to control the early market for mobile payment, mobile advertising and related data analytics.

But the commission today said regulators had concluded that the joint venture would not impede competition for the roll out of mobile payment and other m-commerce services in the UK and beyond.

A number of alternatives already exist to the joint venture’s planned mobile wallet platform and many more are “very likely to emerge,” said the commission in a statement.

“Some of these alternatives may rely on a secure access to the SIM card of the mobile handsets in order to store sensitive data like bank account numbers, etc.,” the commission said in the statement. “This access will be controlled by the mobile network operators, including, in particular, the three parents of the joint venture. However, other alternatives exist, which do not store sensitive data on SIM cards, and it is unlikely that the creation of the joint venture will allow the parent mobile network operators to block these alternative routes to market using technical or commercial means.”

The alternatives to the SIM that the commission mentioned probably refer to embedded chips in NFC phones or other secure elements and to cloud-based wallets–with or without an NFC component.

Regulators also said that they believe the joint venture wouldn’t close off access to mobile advertising and data analytics, saying there are “various other players who have access to a comparable set of data and who will offer services in competition with the joint venture.”

Besides setting technical specifications and business rules for NFC payment applications, the Project Oscar telcos have said the venture would provide a “single contact point for advertisers, media agencies, retailers and brands.” They noted that service providers would be able to “book advertising space and create campaigns across all opted-in mobile users, affording economies of scale that they could not ordinarily achieve.”

The three telcos originally announced plans for the joint venture in June of 2011 and had hoped the organisation would be up and running by now. The EU approval allows them to set up a common NFC wallet platform, though the telcos will compete on brand and services.

A rejection of Project Oscar by the European Commission would have called into question other proposed or operating m-commerce joint ventures in Europe, including those in the Netherlands, Germany, Sweden, Denmark and Hungary.

Like the UK venture, the other groups plan to build a common platform for NFC services, and in some cases to hire a common trusted service manager. Most of the groups are led by telcos.

Three UK, the country’s fourth mobile operator, had registered opposition to the proposed joint venture. Three did not have a statement today in response to the approval of Project Oscar by antitrust regulators.

There were also reports that Google and PayPal had challenged Oscar in Brussels. Both are rolling out mobile payment and commerce.

Google plans to expand its Google Wallet to Europe, and had planned to launch the wallet in at least one major European city during the first half of 2012.

Last month it announced a revamp of its Google Wallet. The so-called Google Wallet 2.0 supports cloud-based payment applications but still requires Google to have access to a secure element.