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By Steve McCaskill
BT is returning to the consumer mobile market for the first time in 10 years with the launch of BT Mobile, a range of 4G SIM-only plans which are discounted for the company’s broadband customers.
Following the relaunch of its business plans last year, BT Mobile is the next step in the firm’s mobile strategy, which will see the launch of a hybrid MVNO-Wi-Fi mobile network and the acquisition of EE for £12.5 billion—if the deal is concluded and receives regulatory approval.
It also establishes BT as a “quad-play” player, allowing it to compete with Virgin Media and TalkTalk, which already offer packages of four services to customers, and Sky, which is to launch an MVNO in 2016.
But what does BT’s initial announcement mean for consumers and the wider U.K. telecoms industry?
Ernest Doku, Telecom Expert at uSwitch
“After a long time away, BT is throwing its hat back in the mobile ring with an incredibly competitive set of SIMO tariffs—provided you’re an existing customer. In a time of hand-me-down smartphones, BT’s plans are perfectly poised to become a disruptive part of its consumer strategy—and that’s before the EE acquisition comes into the equation.”
“Existing customers get a deal that plants BT firmly ahead of TalkTalk and Virgin from just £5 for 500MB of 4G data. With superfast speeds on top, its 4G offering is another selling point that gives BT Mobile an edge over the rest. BT’s capped contracts, parental controls and shared billing offer peace of mind for users and make this an ideal offer for the family. Sports fans will welcome the addition of the free BT Sport app, a huge draw for new customers sitting on the fence.”
“As more customers consider taking multiple services with one provider, a strong mobile offering is the final string in BT’s bow. With BT Mobile available to its extensive broadband customer base at such competitive rates, quad play could fast become common place in U.K. households—where providers offer mobile, broadband, home phone and a landline in one go.”
“Whilst multiple services with one provider can offer simplicity for consumers, with so many different bundles available for different products, it can be trickier to compare deals across providers, and subsequently to know if you are getting a good deal. Make sure you look at what you use and what you need, before signing up for something that isn’t the perfect bundle for you.”
Dominic Baliszewski, Telecom Expert at broadbandchoices
“BT’s 4G SIM-only (SIMO) launch is exactly the kind of shake up that was needed. Starting at just £5 per month, the pricing is very competitive for existing BT customers and confirms BT’s ambitious plans to dominate quad-play before anyone else can get a foothold.”
“TalkTalk and Virgin Media have both had their own mobile offering for a while now, yet people have so far remained hesitant to sign up on a quad-play basis. Broadband, TV and phone is still very much seen as a household purchase whereas a mobile phone service is considered a personal one. Bringing about a shift in perception will not happen overnight but if BT [is] willing to put the marketing muscle so badly needed behind these packages, quad-play could completely change the bundles market.”
“BT’s timing is certainly opportune. As mobile phone handset improvements plateau, an increasing number of people are simply keeping their existing handset and buying a low cost SIMO, rather than shelling out for an expensive monthly contract that comes with a slightly better handset included. This trend will lead to greater churn generally in the mobile market as SIMO contracts tend to last for just 30 days or 12 months, rather than the 24-month restrictive contracts traditionally associated with handset-inclusive deals.”
Steven Hartley, Practice Lead, Service Provider and Markets at Ovum
“Ovum does not expect BT’s new consumer mobile proposition to change the UK market—yet. We see this more as a statement of strategic intent rather than a major push into mobile. BT promised to launch a consumer mobile service before the end of its financial year and, with a week to go, it has hit that target. However, it is a first step on a strategic path that will become much more assured upon the completion of its proposed purchase of EE. The UK is moving to a quad-play market and rivals will need to respond.”
“BT’s offers are aggressively priced, reflecting a much more favorable wholesale deal through EE than BT ever managed with Vodafone. However, the main emphasis from BT is on SIM only plans sold to existing BT customers, which will limit the addressable market. Given that most 4G handsets in circulation today are still under contract this reduces the pool of potential customers. BT will offer handsets, but these are limited to just four options and do not include ‘hero’ devices, such as the iPhone or Samsung S6. It will also sell to non-BT Broadband customers, although much of the promotion and the sales channels proposed will be targeting existing customers.”
Professor Mark Skilton, Warwick Business School
“This is an aggressive move into mobile by BT and is a sign of the changing habits of how broadband and internet services are being used by consumers and businesses. BT want[s] to make sure they are in the mobile market, which is now where most of us use the internet. BT’s strategy is to capture the mobile channel as well and to build stronger customer retention.”
“Just owning the infrastructure is not enough; the real money is now in maximizing your customer base. Investors now look at a company’s average revenue per usage, while minimizing ‘churn’—the number of users that leave a firm—is vital. Creating bundled content for consumers helps to keep them attached to that company, so BT will be able to offer broadband, TV, mobile and landline phone services—a quad bundle.”
“BT is rushing to implement 4G, which will be faster and be more data centric for users, who will be able to download even more films, music, TV programs, live sport and content from the internet. If the future is mobile content on networks then BT and others like Sky must hold onto their customer base and exploit economies of scale by attracting and keeping them.”
“Hopefully it means lower prices and more choice for customers, but it remains to be seen how flexible this will be for customers as the networks fight for market share, and the ever increasing demand on the network from higher bandwidth pushing higher investments for telecoms companies.”