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What’s the BT threat that Sky & Vodafone are working to combat?

January 23, 2014 - Staff@seenituk

bt_app_epgOver the past few days newspapers’ City pages have been awash with speculation about a possible tie-up between Vodafone and BSkyB to ward off the “threat” of BT and BT Sport.

In most of this coverage, both the threat and response to it are poorly defined but with a little bit of imagination it’s possible to speculate about what BT might unveil in 2014 and beyond and why its rivals might be worried.

When Ofcom auctioned off 4G spectrum for mobile services, one of the winners was a company called Niche Spectrum Ventures, a wholly owned subsidiary of BT.

The successful bid makes BT a member of a very select group of companies who own their 4G spectrum, the others are Three, EE, Vodafone and O2, and has prompted much speculation about how it’ll use this capacity.

The company is already looking to bolster broadband speeds in areas where it can’t offer its infinity fibre broadband and has signed a deal to wholesale capacity to O2.

But what if it has other potentially more disruptive uses in mind for its 4G spectrum?

Not long after winning the spectrum BT seemed to rule out building a new mobile network, but there has since been talk of BT branded SIM cards finding their way to market and a recent white label wholesale deal with EE has prompted talk of BT launching a virtual mobile network.

This seems a safe bet as rivals Virgin Mobile and TalkTalk already offer customers a ‘quad play’ package of mobile, landline, TV and home broadband and BT will want to compete.

If we assume BT is about to start reselling EE’s network capacity to consumers, where would its own 4G spectrum come into play?

While wholesaling capacity from EE might suggest BT has no need for its own 4G data network, the lower costs of owning its own spectrum could allow BT to shake up the mobile market in a similar way to its disruption of the pay-TV sports market.

Imagine for a moment that BT Mobile handsets switched between the EE network and BT’s 4G network depending on what the user was doing or, most tantalisingly, what the user was watching.

Under such a model BT could use its in-house 4G capacity to allow customers to watch BT Sport on their smartphones at no cost and without it coming out of their data allowance.

The company already exempts BT TV usage from any broadband download limit the customer may have, so it’s not impossible it could be looking at ways to extend the concept.

This would be a potentially disruptive move which could lead to rapid growth for any new BT Mobile service.

And what if the company didn’t stop at sports and took its wider TV service mobile, again with no cost to customers beyond their existing TV and mobile subscriptions?

While this is all uninformed speculation, it’s possible to see why the prospect of such a move would force Vodafone – currently not really a BT competitor – and Sky to consider their options.

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Tagged With: Telecoms

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