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BT Threatens Price War With New 4G Offer

Iain Morris
3/25/2015
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BT has barged into the UK's mobile market with a cut-price 4G offer that may kick-start competition over quad-play offerings and force mobile rivals to up their game.

The service launch had been widely anticipated since last weekend, when the UK's Financial Times reported that BT Group plc (NYSE: BT; London: BTA) would re-enter the mobile market this week ahead of its mooted £12.5 billion (US$18.6 billion) takeover of EE , the country's biggest mobile operator. (See Eurobites: BT Jumps Into Mobile With MVNO.)

In a statement released this morning, BT said it would begin selling 4G services for as little as £5 ($7.45) a month on a 12-month contract using EE's mobile network.

The fixed-line incumbent signed a mobile virtual network operator (MVNO) agreement with EE back in October 2013, switching from a previous MVNO agreement it had with EE rival Vodafone UK. (See Euronews: BT Signs 4G MVNO Deal.)

BT said it would unveil additional mobile offerings once it completes its takeover of EE. With competition authorities currently examining that deal, BT expects to have finalized the transaction by March 2016. (See BT Locks Down £12.5B EE Takeover Deal.)

The mobile offer unveiled today will allow existing BT Broadband customers to pay £5 ($7.45) a month for 500MB of 4G data, unlimited texts and 200 minutes provided they supply their own devices. Consumers who do not currently subscribe to one of BT's broadband packages will be able to obtain the same service for a monthly fee of £10 ($14.89).

For those wanting more out of a mobile service, BT Broadband subscribers can obtain 2GB of data, unlimited texts and 500 minutes for a monthly fee of £12 ($17.87). The cost of that deal rises to £17 ($25.32) for other consumers.

The operator is also promoting a top-end service that comes with 20GB of data as well as unlimited texts and minutes. That package costs £20 ($29.78) a month for BT Broadband customers and £25 ($37.23) a month for anyone else.

Comparable SIM-only offers from EE start at £9.99 ($14.88) a month -- twice as much as BT's basic offer for existing broadband customers.

Upselling mobile services to its 7.6 million broadband customers will be a priority for BT, while luring EE subscribers to its broadband offerings will be just as important following the takeover of the mobile player.

BT is also stocking four LTE handsets in its online store -- the Huawei Ascend Y550, the Samsung Galaxy Ace 4, the Samsung Galaxy S4 Mini and the Samsung Galaxy S5.

"Offering BT customers the UK's best value 4G data deal is a great way to start our journey towards re-establishing ourselves as a major player in consumer mobile," said John Petter, the CEO of BT Consumer.

BT made no mention of a WiFi calling service, despite speculation it would launch the technology this week, but said its 4G customers will benefit from being able to access its network of five million WiFi hotspots across the UK.

EE launched a WiFi calling service earlier this month, allowing owners of the Samsung Galaxy S6 to make phone calls over WiFi as opposed to cellular networks, while Vodafone recently unveiled plans to introduce WiFi calling in the summer. (See EE Launches WiFi Calling on Samsung S6, Vodafone UK to Launch VoLTE in Summer and 3 UK to Launch VoLTE by September.)

BT also appears keen on taking the fight to Vodafone UK , the UK's third-biggest mobile operator, in the content arena, having indicated that its 4G customers will be able to access programs from BT Sport by downloading the BT Sport App.

While EE has highlighted the speed of its 4G services, Vodafone has been trying to lure customers to its 4G services through a content partnership with Sky Sports, allowing customers to watch sports events on 4G phones.


Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel here on Light Reading.


Following today's announcement, BT's rivals will be under pressure to lower 4G prices and more rapidly develop either fixed-line or mobile capabilities.

TalkTalk , the UK's fourth-biggest broadband operator, has been making a push into quad-play through an MVNO deal with Vodafone, but it has continued to lose ground to BT. (See Quad-Play Cheerleader TalkTalk Falls Further Behind BT.)

That did not stop TalkTalk from insisting that BT could not match it on value in a statement published earlier today.

"TalkTalk Mobile tariffs start from £3.75 ($5.58) a month, which combined with broadband packages provide a saving of up to £260 [$387] compared to BT's entry level mobile package for broadband customers," said the operator in a statement.

Vodafone, Telefónica UK Ltd. (trading as O2) and Three UK have so far resisted entering the quad-play fray, with both Vodafone and 3 indicating they see limited demand for bundled services. (See BT & EE Spur UK Sector Shake-Up.)

Nevertheless, Vodafone, whose 4G prices have been among the highest in the market, was reported in early February to have drawn up plans for the launch of broadband and TV services by connecting fiber network assets -- which it gained through a £1 billion ($1.5 billion) takeover of Cable & Wireless Worldwide plc (London: CW) in 2011 -- to BT's local exchanges.

Meanwhile, O2, the country's second-biggest mobile operator, and 3, its smallest, are now focused on creating the UK's leading "mobile-only" player. Late Tuesday, O2 owner Telefónica agreed to sell the UK business to 3 owner Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) for £10.25 billion ($15.3 billion). A merger between 3 and O2 would serve around 32 million customers, putting it ahead of EE and leaving Vodafone as the smallest player in a three-player market. (See Telefónica Seals $15.2B O2 Sale to Hutchison.)

That transaction has won backing from CityFibre , a small operator competing against BT in the backhaul market, which this morning argued the tie-up would provide a counterweight to a merger between BT and EE.

"Consolidation is the only way to combat BT's ever-growing monopoly over both the retail and wholesale telecom sectors," said Mark Collins, CityFibre's director of strategy and public affairs, in a statement.

CityFibre is clearly concerned the merger between BT and EE would jeopardize its deal to provide backhaul services to MBNL, a infrastructure joint venture between EE and 3, and believes a combined 3 and O2 could become an alternative anchor tenant for the fiber backhaul network it aims to build. (See CityFibre Sees Backhaul Interest From O2, Vodafone.)

At the time of publication, Vodafone and O2 had yet to respond to questions from Light Reading about the impact BT's 4G launch would have on the market.

BT's share price rose by 0.3% during early-hours trading in London.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
3/30/2015 | 9:18:31 AM
Price Cutting not a Winning Strategy
Price cutting can gain customers short-term, but companies soon learn that no firm wins in a price war. Just look at this historry of U.S. airlines -- losses, bankruptcies, etc., during price wars -- a profitble industry since price wars stopped and many of the price-cutting airlines no longer in business.
iainmorris
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iainmorris,
User Rank: Blogger
3/25/2015 | 9:12:05 AM
BT in strong position
The EE deal puts BT in a very strong position -- able to promote a high-speed 4G service and to bundle that with the content offerings it has built up through spending on rights to screen English Premier League and European Champions League soccer matches, besides various other sporting fixtures. 
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