BSkyB, the UK satco that also offers wireline broadband, and Virgin Media, soon to belong to Liberty Global and which offers quad play services, better get ready for the once staid, but recently rejuvenated BT is coming after broadband.
Recent BT developments include:19 deals with local government authorities and the UK government to help fund BT’s deployment of all-fiber and hybrid fiber-copper wire networks. BT says its high-speed fiber-based service is available to more than half of British homes and businesses and it’s accelerating the rollout in rural areas.
BT also has an archipelago of 5 million Wi-Fi hotspots which is increasing by 20,000 a week. The service is free to BT’s broadband subscribers. Residences that use BSkyB or Virgin Media’s broadband have to pay.
The most startling development was last week when the company said it would make its new BT Sports OTT channel, which has a number of premier sporting events, available to its broadband subscribers for free. Once again, subscribers to BSkyB and Virgin Media broadband cannot get the service for free. BT also plans to offer a full range of VoD content over the fiber network.
BT, which unlike most of the world’s telcos does not offer a mobile phone service, has recently purchased spectrum that can be used for 4G mobile broadband. It paid Ofcom £202 million ($311 million). Expectations are that BT will partner with an existing mobile service provider such as O2, which years ago its debt mountain forced BT to spin out, of Vodafone where it has an MVNO. Such an alliance would allow BT to offer mobile broadband as well as stationary-but-wireless broadband in sparsely settled areas. In its annual report, BT says it already has 1.5 million fiber broadband subscribers, counting both consumers and businesses. It said that compares favorably to other European countries.
Its total broadband subscriber count is 17.6 million and BT has more than 150 third parties selling broadband that uses its infrastructure. BT Retail, which in theory it treats like an independent third party, added 424,000 new broadband subscribers during the year, a 7% increase to 6.7 million. It has 51% of all British wireline broadband subscribers.
BT said its fiber broadband network now passes more than 15 million premises. With government support (here’s guessing that means financial assistance and favorable regulations) and ‘an acceptable investment environment,’ it expects to pass more than 90% of premises with its fiber-based network in the next three to four years.
In the most recent quarter ending March 31, BT won 10 more Broadband Delivery UK regional bids to deploy fiber broadband including in Cambridgeshire, Devon & Somerset, Wiltshire, South Gloucestershire, Hampshire, Shropshire and Highlands & Islands. It had previously won 9 bids and now has a total of 19. It cited its success in the rural Cornwall area where it has extended its coverage goal to 95% of homes and businesses, up from the initial target of 80%−90%.
It’s hard to know what BT competitors might have done differently but it seems they are foolish to let BT win all these regional deals. BT is becoming the only all-fiber game in town and as the owner it will do everything it can to maximize its revenue. Even BT resellers such as Talk Talk are beginning to notice the advantages that a network owner has. Talk Talk has already asked for government intervention, hoping to limit BT’s powers. To paraphrase: ‘the network owner is king’ and that’s what BT wants to be in the UK broadband market.
BT CEO Ian Livingston makes very clear where he is leading the company. He has said BT plans to couple its Wi-Fi archipelago and newly acquired LTE/4G spectrum to ‘make sure its customers will be the best connected.’ That sounds like trouble for BSkyB, which sells broadband that uses BT’s networks, and Virgin Media, which has built its own hybrid fiber/coax networks that passes by about 50% of UK residences.
BT has also scheduled to field test vectoring this fall for possible use in areas where all-fiber is not affordable or feasible. If vectoring passes muster, which seems almost a certainty, BT will be able to offer 80 -100 Mbps speeds, which are sufficient to compete against Virgin Media.
For its fiscal year ending March 31, BT reported revenue was down 5% to £18.3 billion ($28.1 billion), the result of years thinking and acting like a government-owned company, which it once was. However, during its fourth quarter (January 1-March 31), revenue was flat, a significant improvement over the year ago quarter. Profits were up 2% to £6.2 billion ($9.5 billion) for the year.