UK Concern Viasat Purchase of Inmarsat

UK Concern Viasat Purchase of Inmarsat

Britain’s competition regulator, CMA, to deepen investigation, after finding the merger could drive up Wi-Fi prices for airlines

Britain’s competition watchdog has confirmed it will deepen its investigation into the merger between US satellite operator Viasat and Inmarsat.

It was last November when the headquarters of US company Viasat She revealed her intention for the first time Acquisition of British satellite communications company Inmarsat for $7.3 billion, to “create a leading global communications innovator with improved reach and range to connect the world at an affordable, secure and reliable cost.”

However, the deal is attracting regulatory scrutiny. In late July the European Commission pointed out The deal will need to be approved before it can be completed.

Regulatory concerns

A month later in August, the UK’s Competition and Markets Authority (CMA) began realizing the first phase of the deal.

and here announce This week he found a problem with the deal.

It said it had “determined, based on the information currently available to it, that this merger is expected to significantly reduce competition within the UK market or markets.”

Consequently, this merger is being referred to a “Phase 2 investigation unless the parties make acceptable commitments to address these competition concerns.”

So what are the CMA’s antitrust concerns about the deal?

flight case

The CMA . said I’ve found that Viasat’s merger with Inmarsat could result in airlines facing higher prices for in-flight Wi-Fi, and possibly degrade in-flight Wi-Fi quality.

The CMA noted that the demand for satellite communication is growing rapidly, driven in large part by the ever-increasing use of the Internet by businesses and consumers, including through the increased use of data-intensive applications.

“The investigation by the Competition and Markets Authority (CMA) found that Viasat and Inmarsat are closely competing in the aviation sector, particularly for the provision of onboard Wi-Fi for passenger use,” the regulator said. “While only some airlines currently offer in-flight connectivity, the availability of these services is expected to increase significantly in the coming years.”

The deal combines two of the market’s strongest suppliers with a few well-established players, despite the plans of other players, such as Starlink, OneWeb and Telesat, who seek to target the airline sector.

The fact is that this is one of the most difficult industries for satellite operators to enter, the CMA said, and a preliminary investigation by the CMA found significant doubts about when – if any – these suppliers would be in a position to compete effectively with Viasat and Inmarsat.

The CMA investigation also found that it can be very difficult for carriers to switch providers once the connectivity solution is installed.

Therefore, the CMA is concerned that the merging company could effectively lock up a significant portion of the customer base before the emerging suppliers can compete.

second stage probe

“This is an evolving market, but the combined companies are currently two major players – and it remains uncertain whether the next generation of satellite operators will be able to compete against them effectively,” said Colin Raftery, Senior Director, CMA.

“Ultimately, airlines could face a worse deal because of this merger, which could have spillover effects on UK consumers as in-flight connectivity becomes more prevalent,” Raftery said.

Companies now have 5 working days to submit proposals to address competition concerns with the Capital Markets Authority.

The CMA then has another 5 working days to consider accepting any offer rather than referring the case to an in-depth investigation in the second stage.

Viasat (US-based) and Inmarsat (UK-based) both operate their own satellite networks and provide two-way satellite communication globally to commercial and government customers.

The joint entity is expected to operate a fleet of 19 satellites currently in service.

Another 10 satellites are under construction and are planned to be launched within the next three years.

Sector standardization

However, the two companies are relatively small players competing against much larger competitors – and some of them have access to much more resources.

For example, SpaceX subsidiary Starlink has approximately 2,900 Starlink satellites in operation.

Meanwhile, Britain’s OneWeb is in the process of merging with French satellite company Eutelsat, which is already a shareholder in the British company.

The UK government (a OneWeb contributor) welcomed this development, but indicated that it would “reserve its own stake and exclusive rights over OneWeb”.

There’s also Amazon.com’s Project Kuiper, which plans to spend $10 billion building a network of more than 3,200 satellites in low Earth orbit.

#Concern #Viasat #Purchase #Inmarsat

Leave a Comment

Your email address will not be published. Required fields are marked *