UK mobile operator EE has unveiled plans to begin promoting a range of connected devices other than smartphones in advance of its takeover by fixed-line incumbent BT.
The combination of the UK's biggest fixed and mobile players will be in a strong position to support devices that can be used in homes and offices, on both fixed and mobile networks, and EE appears to be wasting no time in laying the groundwork.
Besides developing its own products, EE aims to form service partnerships with other businesses and has highlighted four areas it is keen to address -- connected home, connected you, connected car and connected work.
EE has already taken steps into the connected home through its launch of EETV, a broadband-delivered TV service, in October last year. But that service could end up being subsumed into BT Group plc (NYSE: BT; London: BTA)'s more sophisticated TV offering following a merger, which the operators expect to complete early next year, pending regulatory approval. (See Risky Business for EE and BT Locks Down £12.5B EE Takeover Deal.)
While EE's TV service scores highly on functionality, it lacks the exclusive sports content available from BT, which has spent a fortune on rights to screen top-flight soccer matches.
Nevertheless, both players may be keen to provide other connectivity services in homes, allowing customers to control and monitor a variety of household appliances.
EE also believes it has a role to play in the market for activity-monitoring and fitness-tracking products -- which fall under its connected-you category -- and as a partner to automotive companies providing connected-car services to vehicle drivers and passengers.
The operator has already teamed up with the RAC, a UK motoring organization, on a telematics service aimed at fleet managers, but the consumer market represents an untapped opportunity.
In the US, AT&T Inc. (NYSE: T) has formed partnerships with carmakers including General Motors and been allowing smartphone customers to add connected-car services to their tariffs for an extra $10 a month.
In the connected-work category, meanwhile, EE intends to support new products that will improve "working efficiency" and could include remote-monitoring and asset-tracking services.
The operator has already taken the wraps off the first of its new connected devices -- a 4G-enabled camcorder that will let users broadcast footage immediately after it has been filmed. (See Eurobites: EE Tightens 4G Focus.)
The camcorder is available on a range of contract, prepaid and shared plans and is being stocked by high-street retailers including Dixons Carphone, Selfridges and Jessops.
Following their merger, BT and EE may hope to lure customers from rivals by offering service plans and devices that take full advantage of both fixed and mobile capabilities.
Even so, it may be a challenge to boost service revenues from the sale of new types of device.
As a growing number of products become connected, operators are likely to offer packages supporting a multitude of household and personal devices for a set monthly fee, effectively reducing the average revenue per device.
Service revenues may also have to be shared with ecosystem partners in particular instances, especially where a number of players are supporting a new offering.
EE's Internet of Things announcement came on the same day the UK's Competition and Markets Authority raised concerns about the impact a merger between BT and EE could have on the communications market.
"[BT and EE] supply important inputs at the wholesale level, which enable other communications providers to compete at the retail level in the provision of mobile services," said Andrea Coscelli, the CMA's executive director of markets and mergers. "We have found that there is a real risk that the merger could reduce their incentives to supply these inputs and that this could have a detrimental impact on the retail mobile market."
The CMA is currently conducting an in-depth "phase 2" investigation into the merger proposals and could force BT and EE to make concessions before it approves the merger.
Rivals including Vodafone Group plc (NYSE: VOD) have repeatedly urged UK authorities to impose strict conditions on BT and EE before letting them proceed.
"They have to give up some spectrum and they have to provide decent access to fiber," said Vittorio Colao, Vodafone's CEO, during a recent earnings call with analysts. "Otherwise it's better if the merger does not go through." (See Vodafone May Buy Content to Fight BT, Telefónica.)
— Iain Morris, , News Editor, Light Reading