BT has always been seen as the sleeping giant of the mobile world but this behemoth is starting to stir with a mobile strategy that could shake the industry’s foundations.
This is BT’s first serious play for mobile since it quit the market over a decade ago with the sale of what is now O2. The operator’s aim is two-fold – to use its recently inked MVNO partnership with EE and its 4G and Wi-Fi capabilities to drive mobile into its base of nearly 10 million existing customers – and to make mobile a key player in its quad-play strategy.
BT began its assault on the mobile market last month with the launch of BT One Phone. Aimed at its huge base of over 900,000 business customers, BT One Phone promises true convergence between fixed and mobile, with all fixed, mobile and extension calls routed to one handset.
The cloud-based system works with a full range of mobile devices, using a BT Sim card in customers’ existing handsets. The jewel in its crown is the offer of an in-house mobile network, giving in-house landline quality to mobile calls.
If mobile operators were hoping for another BT Fusion, the operator’s first and poorly received attempt at service convergence in 2005, they will be disappointed.
Analysts believe BT One Phone is a game changer, throwing down a clear challenge to mobile operators.
CCS Insight’s director of operator strategy Paolo Pescatore said: ‘This is very much in competition with Vodafone’s OneNet, EE’s LTE ambitions and O2’s enterprise play. The mobile operators will all be looking at this deal very closely. BT has a legacy presence in the enterprise space and its existing Wi-Fi and broadband infrastructure.There is so much they can do with this product. There is a lot of potential.’
BT is also targeting mobile consumers with plans to launch a consumer offering later this year. The operator remains tight-lipped on its consumer plans but BT is expected to open up on a number of fronts.
Observers say BT will pursue a “quad-play” strategy that offers customers TV, broadband, and fixed and mobile telecoms on a single combined tariff.
It is also expected to leverage its mobile and TV offerings to drum up valuable new customers. Anthony Cox, associate analyst with Juniper Research, believes BT’s move into TV drove its choice of EE as its MVNO partner.
He said: ‘And why EE rather than O2 or Vodafone? Essentially, the faster the mobile network the better. Only with 4G can TV be streamed to mobile devices without delay and loss of quality, and EE has been pretty quick to roll out 4G services in the UK.
‘Streamed mobile video will be the next evolution of mobile broadband - BT’s MVNO partnership should allow the operator to extend its coverage for TV services offered under the BT Sport channel, while also offering mobile services.’
BT could also use the promise of high quality indoor mobile coverage to win over new customers. Financial organisation Espirito Santo Bank’s investment research team predicts BT could offer consumers an on-site mobile network, similar to BT One Phone’s solution.
In a recent briefing note Espirito’s research team said: ‘BT has previously stated that it will launch a mobile product for the consumer market by the end of the current financial year and we expect it to have convergence features similar to the One Phone offering.
The team added: ‘One of the key differentiators for BT (One Phone) is that it will install a mobile network inside the customers’ premises, effectively guaranteeing landline quality. This is what BT is utilising the 2.6GHz spectrum they acquired last year at a cost of £240m. We expect the consumer product to do similarly.’
So how will mobile operators respond to BT’s renewed assault on the mobile market? Analysts say mobile networks will need to raise their game and break into the quad-play market, to compete on a level playing field with BT.
Vodafone has long been tipped as likely to move into the quad-play arena, either through an alliance with BT’s competitor Sky or through the acquisition of the likes of TalkTalk, which has a TV offering. BT’s move makes that all the more likely.
Pescatore said: ‘My view is that telecoms operators cannot survive unless they have all the assets to compete in quad-play. It is all about locking in customers.’
Likewise BT may need to ramp up its retail presence if it is to compete with the mobile networks on the high street. Options include either inking a retail partnership with the likes of Phones 4u or the newly merged Dixons Carphone or even buy a chain of retail stores to build its own retail empire.
Pescatore said: ‘If you look at BT’s competitors, there is only one thing missing – BT’s retail presence. If they have serious aspirations in this market they need front facing capabilities and the only way to do that is to have retail presence on the high street.’
BT insists it has no plans to open up stores on the high street but what is clear is that mobile operators cannot afford to ignore this titan’s increasing presence on the mobile landscape.