By the end of 2015, there could be a significant UK price war between our major TV, broadband, home phone and mobile providers trying to increase their customer base.
Companies BT, Sky and Vodafone will join Virgin and Talk Talk as the only providers of all four services. Some of whom are investing a huge amount to stay ahead of the competition and protecting their stance in the industry.
Quad-play is the name given to the companies looking to involve themselves in all four sectors. Here we will look individually at the aforementioned companies and comment on their strategies moving forward.
As a company expanding their services into mobile, BT has rejected a deal with O2 in order to buy out EE in a deal worth £12.5 billion. The acquisition entitles BT to EE’s 24.5 million customers in addition to their presence in 18 million homes.
BT is seen as a market leader in providing landline and broadband services. Recently introducing and growing their TV service, BT has become a major threat to Sky’s position in the market.
Previously BT has owned a mobile network called BT Cellnet which became O2 in 2002; before it was acquired by Spain’s Telefonica for £17.7 billion in 2005.
Sky announced at the end of January 2015 that they will be launching their own mobile network set to start in 2016. They will be using O2’s network, in similar circumstances to Talk Talk and Tesco Mobile. Having been in talks against rivals Talk Talk and 3 to acquire O2; Sky backed out to leave 3 to buy O2 for £10 billion.
Although seen as BT’s biggest competitor, Sky started in the market as the most popular digital TV service and is present in 10 million homes. Having run a successful broadband and home phone service over the last few years, Sky would have been following BT’s acquisition of EE very closely because a move into the mobile market is seen as the next move for both.
The last we heard of Vodafone’s move into quad play was in November 2014. Back then Vodafone announced they were to launch UK broadband and TV services for a spring 2015 start. To follow through with their plans, Vodafone will use its own Cable and Wireless business fibre network and BT’s Openreach.
Experts are suggesting this is a more difficult move for Vodafone in comparison to BT and Sky as it appears Vodafone is moving into a more crowded market. They will, therefore, need to compete on price or service to sustain medium and long-term revenues.
Virgin recently announced they are investing £3 billion to increase their network reach from 13 to 17 million homes. Already being able to boast all four services Virgin are somewhat ahead of the competition. However, complaints about the quality services have been fairly constant.
Many of the complaints are because the Virgin network does not reach the more rural areas, but the investment is not expected to solve this issue. This is also partly the reason behind why Virgin only has 5 million customers in the UK.
TalkTalk has been able to offer deals which include all four services since 2012 but is yet to be a major player in the industry. They recently declared an increase in all sectors though, taking their consumer base to 1.3 million.
Having the talks with Vodafone and O2 fall through mean that they cannot expand their mobile network currently. However, they argue that they can attract more customers because they offer cheaper products than the competition. With the competition increasing in the sector Talk Talk will need to prepare and strategise well over the next few months. This will give them more chance to grow in the industry, or fear being frozen out.
In fear of a few companies having such a big share in each sector, there may be calls for regulations depending on how it all pans out over the next few months and years. Each company will want to be chosen on the basis of price or quality service. Excitingly then, there is scope for a price war if each company undercuts one another’s pricing. It looks like we could be in for an interesting few months in British telecommunications.