Firstly, it is important to remember that BT was previously a mobile operator – Cellnet, and later BT Cellnet, before demerging from BT in 2002 and becoming O2. The reason behind this was because BT was in substantial amounts of debt, quite possibly ‘bubble’ led, and was third in the mobile running behind both Orange and Vodafone.
So why does BT want to be involved in the mobile market?
Well, after the rebrand to O2, the brand drastically improved and was sold to Telefónica in 2005 for £17bn so it may be that there is an element of regret involved; however BT were in a bad position at the time.
The main reason however, is to try and replicate the already successful concept in America of ‘Quad-Play,’ the idea that the consumer can have all of their services (TV, broadband, landline, and now mobile) with a single provider. Whilst this has already been done by Virgin, its success has been limited, I would say quite possibly down to the relatively low key mobile offering which runs off the back of EE rather than on its own network.
EE has become the chosen target for BT over O2 for a number of reasons, not least because of the larger volume of Customers in comparison to O2, but primarily because of the more advanced 4G offering which will allow “BT to accelerate its existing mobility strategy whereby customers will benefit from innovative, seamless services that combine the power of fibre broadband, Wi-Fi and 4G,” as commented by BT. The tactic of keeping the two networks in play has also helped to keep costs down.
Where does this leave us?According to Ofcom customer satisfaction levels in 2014, BT has been ranked worst for customer service in the Landline and Broadband sectors, and EE was ranked the worst for Mobile service. Thinking back to the second half of last year, enormous amounts of problems were caused with the launch of the BT Sport channel, both to the higher than expected uptake, and then to the other areas as customer service advisers were required to move to help out with the BT Sport issues. Is this going to be replicated this time around?
Will there be cost increases to the services?With about £5.5bn of the £12.5bn to be paid in the form of shares, the rest will need to be paid by the company and so a price hike could be inevitable. However, others comment that the opposite could in fact be the case, but only when the consumer takes all four services, and then is inevitably subject to penalties if they were to remove one/all of the BT services.
…and if the deal with EE falls through?
The bid for EE has been formally made, and EE has formally accepted the deal; so the only barrier in the way is Ofcom to keep an eye on the deal, and the European Commission and the UK’s Competition and Markets Authority to act if this is seen to create a monopolising position.
However, BT has said that if the deal is blocked, it will still continue with its own plans to provide a service, so it looks like either way, BT will be getting into the mobile game.
If you’re an EE customer and concerned about the deal, or just have any questions or comments, feel free to get in touch or send us a tweet @TimeTele.
N.B This article is based on my opinions and may not necessarily reflect the opinions or facts held by others not referenced in the text.