O2 Confirms DSL Aspirations

Telefónica SA (NYSE: TEF) subsidiary Telefónica Europe plc (O2) today confirmed that it has plans to offer fixed-line broadband services in the U.K. in addition to its existing mobile services. (See Telefónica Swoops In on O2.)

Light Reading reported on O2's intentions and its fixed broadband preparations last month. (See Mobile Giants Size Up DSL.)

Having released its first quarter KPIs (key performance indicators) this morning, O2's CEO Peter Erskine said it was very possible that O2 would offer combined fixed and mobile services in the U.K. as it has already done in the Czech Republic and Germany. Erskine said customers now wanted a combination of mobile and broadband, and that he would look at all the different ways O2 could enter the DSL services market. (See O2 Unveils Q1 KPIs.)

O2, which now has 16.34 million customers in the U.K., is playing catch-up with rival Orange UK , which is already working towards uniting its mobile and fixed broadband business under a single brand, and losing some staff in the process. (See France Telecom Culls UK Staff.)

And then there's cable giant ntl group ltd. (Nasdaq: NTLI), which is acquiring Virgin Mobile Telecoms Ltd. so it can combine fixed voice, TV, video, broadband, and mobile voice in one service package. (See NTL Takes Virgin.)

O2's entry into the broadband market, in addition to Orange and NTL's moves, will pile extra pressure on its former parent, BT Group plc (NYSE: BT; London: BTA), which already has plenty of competition in the high-speed access market. (See Free Broadband Comes to the UK and Unbundling Heats Up in UK.)

That pressure is expected to intensify further on May 30, when Vodafone Group plc (NYSE: VOD) is expected to announce its fixed broadband strategy. (See Mobile Giants Size Up DSL.)

— Ray Le Maistre, International News Editor, Light Reading

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