BT has entered into exclusive talks to buy mobile network EE for a proposed £12.5 billion – but what will it mean for customers of the two networks?
The move will allow BT to fully compete with Virgin Media as a “quad-play” provider, offering broadband, mobile, landline and television in one bundled package. For existing BT/EE customers, that means they’re likely to be offered discounted deals to take all four services. However, once customers sign one of those deals, the handcuffs are tightened. Switching to, say, another mobile provider is more difficult because the quad-play bundle is priced to cover all four services. Removing one or two elements of that bundle often leads to increased overall prices, which is why operators love bundled deals – they improve customer retention.
The end of EE broadband
BT has already stated that it expects to “generate revenue synergies through selling fixed-line services to those EE customers who do not currently take a service from BT”. That’s corporate doublespeak for shutting down EE’s fixed-line broadband network and transferring the customers to BT. BT will doubtless want as many of those customers as possible to move to its fibre network, where it can lock them down to a new 18-month contract. EE already offers fibre based on BT’s network, so the transition shouldn’t be too painful for customers, although BT will want to supply customers with its own Home Hub router, rather than support equipment previously supplied by EE.
It’s not yet clear what BT plans to do with the mobile network. EE has spent tens, if not hundreds, of millions over the past couple of years trying to establish the brand. Plastering your television screens with Kevin Bacon doesn’t come cheap. However, it seems unlikely that BT will retain the EE brand in the long term. EE will almost certainly become BT Mobile at some point in the future.
T-Mobile and Orange customers
What of T-Mobile and Orange customers who’ve not yet been moved to EE’s 4G network? BT was already working on a new technology that would allow its vast network of Wi-Fi hotspots to handle customers’ calls in areas where there wasn’t a 4G network. BT was certainly having teething troubles with the technology, but says it “remains confident of delivering on these plans should a transaction not take place”. Might it be that BT focuses exclusively on 4G, and uses that Wi-Fi network as a fallback option for those not in 4G areas? It’s highly doubtful the Wi-Fi network has the range or the capacity to cope, but it will be interesting to see how those plans develop.
Reaching rural customers
The EE acquisition could have implications for BT customers in rural regions. BT and EE worked together in Cornwall, using 4G to deliver high-speed broadband to properties that were too remote to reach with underground fibre. That trial collapsed, but BT may now revive those plans to help it reach customers in those remote areas, rather than going to the expense of laying cable. Earlier this month, EE announced plans to extend its 4G coverage in rural regions using a new “micro-network” technology, which it claimed would bring 4G to 1,500 rural communities by 2017.
Goodbye EE TV?
BT hasn’t made any official comment yet, but it’s almost certainly curtains for EE TV, the network’s fledgling home television service which combines Freeview with video-on-demand. BT has invested heavily in YouView, which is a very similar proposition to EE TV, and is still in the process of migrating all of its BT Vision customers to YouView. The last thing it needs is another television service to support. EE TV customers will likely be offered a free YouView box before the service is closed.
Where now for Virgin Mobile customers?
An interesting sidenote from BT’s takeover announcement: it didn’t include customers from virtual networks in its EE customer figures. Does that mean Virgin Mobile, which piggybacks on the EE/T-Mobile network will be forced to look elsewhere? It seems highly unlikely that BT would want to prop up its chief rival. But with O2 effectively putting itself up for sale, Virgin Mobile’s only real alternative is to strike a deal with Vodafone. Unless Virgin’s owner, Liberty Global, decides to buy O2 for itself…
As we reported yesterday, both BT and EE have poor track records when it comes to customer service. Figures released by Ofcom show BT has the worst customer service of any major landline and broadband provider, while EE is bottom of the charts for mobile networks. Mergers of two big companies always cause headaches, as services are merged and billing moves from one company to the other. Ofcom has already singled BT out for criticism for the “speed and ease of getting through to the right person”. The prospect of these two failing customer service departments merging and dealing with increased call volumes will hardly fill customers with joy. Will those fears be sufficient for the watchdog to block the merger? We very much doubt it.