The UK faces a French-style price war as its largest cellco, EE, launches a quad play – something Vodafone said just last week it would not do until it assessed new consumer offerings planned by incumbent wireline telco BT. Now, BT’s own plan to emulate France’s Free Mobile and launch a WiFi-first quad play are rumored to be suffering teething troubles, and the carrier may also be rapidly rethinking its plans to use EE to support its MVNO deal, since they will now be head-on competitors.
EE, a joint venture between France Telecom and Deutsche Telekom, plans to offer a TV service that rivals the BT Vision TV service, which has itself been disruptive, especially to BSkyB, because of the runaway success of its BT Sport channel.
The EE service will come to market with the 70 Freeview free-to-air broadcast channels plus a neat 24-hour replay feature as well as additional online delivered on-demand channels and more than 10,000 TV series and movies, all for under £10 a month for existing EE phone customers. It bundles free TV with a broadband order, like the BT proposition, and also like those of the four French carriers, Orange, Free, SFR and Bouygues, which has resulted in a vicious price war there.
The EE launch is serious because it comes from a company which has existing pay-TV and broadband success. It has the backing of Orange, which is strong in TV in its own country, and also does the same at some European subsidiaries such as those in Poland and Spain. EE can also call on the experience of Deutsche Telekom, which has pay-TV operations in Germany, Croatia, Greece, Romania, Hungary and Slovakia.
Between them this increases content buying power, since the firms reach well over 10m homes already and will now add homes in the UK. Here EE has over 25m customers out of a population of 64m, giving it a marketing target in at least 10m UK homes.
Orange also has the experience of surviving the triple play wars in France, the only the place in Europe which grew up habitually offering free TV to broadband customers. The result of this is that it uses ‘boxes’, which typically offer a full triple play in a broadband gateway acting as a set-top, a VoIP controller and a gateway, as a matter of course. EE may well adopt its French parent’s approach and even its supplier relationships for those boxes. Indeed, the EE service is being launched with a device and software from Netgem, one of Orange France’s set-top suppliers, its first deal in the UK.
The device that will be delivered into UK homes is based on the Broadcom 7241, and it will offer over-the-top services directly from the cloud to each device, rather than transcoding them in the gateway, something which Netgem offered on early devices designs. The device has one terabyte of storage and four tuners for up to four TVs, and up to three further devices can have access TV simultaneously.
TV will be available on iOS and Android smartphones and tablets and later on other devices, as well as on the TV. The EE TV smart box will be free for all EE mobile customers who sign up to an EE Broadband plan and eligible plans start from just £9.95 per month and include free weekend calls and unlimited Broadband, with speeds of up to 17Mbps. EE broadband is mostly wholesaled from BT, but it does have some unbundled DSL lines.
The EE TV system will use smartphones and tablets as smart remotes through a free TV app, and these devices are also supposed to be able to view recorded programs, although we’re not sure how that works if the box has no transcoding. The systems comes with a ‘flick to TV’ option so that anything you are watching on a handset can be moved to the TV with a swipe motion towards the TV.
The news of this launch will compound concerns reported this week that BT is having trouble with its plan to return to the consumer mobile market with what everyone had expected to be a cut-price service based on a WiFi-first offering, built around its huge commercial hotspot presence and its 5m-plus homespots in the UK.
UK newspaper The Telegraph reported this week that BT had hit issues with technology designed to direct voice and data traffic over WiFi rather than 4G. While the reports were not specific, it is no mean feat taking 5m hotspots and homespots and having handsets automatically authenticate on them, without errors and without the homespot customers complaining about a loss of bandwidth. The main issue that was reported by the Telegraph was with seamless movement in and out of WiFi coverage, and the delays that introduces to phone calls. Because this is tricky, most WiFi-first services start with data only and gradually introduce VoWiFi calling, and advise that it is a nomadic service, not a full roaming one (ie you have to stay still when you are making a phone call).
However, the opportunity is large once BT gets it right. Free in France is the company that created this model three years ago and on the back of it has acquired 9m mobile customers mostly on the back of its 5m DSL/fiber/WiFi homespot homes.
It is assumed to be BT’s plan to copy Free and massively undercut mobile operators by enabling calls and data over WiFi and only using perhaps 20% to 30% of its usage over the cellular network. It has had an MVNO agreement in place with EE since October 2013, replacing an earlier deal it had with Vodafone (prior to that it was an MVNO with T-Mobile and before that it owned what is now O2, which was spun off and later sold to Telefonica).
Earlier this year BT launched its One Phone concept design to do away with the fixed line phone, and bundle mobile and fixed lines together, so it will be a logical next step to offer the whole quad play bundle and even to start using its own 2.6GHz cellular spectrum, which it acquired last year, to augment its services.
But Free is a hard act to follow. So far BT has tried to make money out of its BT FON service, only allowing a minimal data cap on WiFi for free and then charging for extra, which has wasted its exclusive relationship with homespot pioneer FON. It has also had notorious issues with authentication and imposes allocated email addresses which customers have no intention of using (or remembering) as the username. It now has to move to EAP-SIM in order to reach tablets and PCs, which means running parallel authentication services for SIM and non-SIM devices.
BT has launched mobile services to its employees and business customers, and said it plans to extend these to consumers as soon as it is ready, probably early 2015. There is now a concern that VoWiFi could be pushed back until the middle of 2015, around nien months away. However, BT denies the delays.