EE, By Gum! BT turns itself inside out to get back to mobile.
BT is, rather belatedly, aping Virgin Media's strategy and business model and, from next year, will exclusively lease long-term space on EE's mobile antennae in an effort to up the competitive ante by bundling so-called '4G' mobile services with fixed line, broadband and pay TV. If it works, BT will become only the second "quad play" service provider in the UK after the long-established Virgin.
The deal will put satellite broadcaster BSkyB's nose further out of joint. Recently BT spent big on securing the rights to televise the UK's Premier League football matches and then paid £190 million for additional bandwidth in the spectrum auction that was held back in February. Now it is going back to the future and will re-introduce a mobile element to its offerings - something that Sky cannot do, yet... But this latest twist might just spur Sky into some kind of retaliatory competitive action.
Once upon a time BT was a major mobile player with its Cellnet unit in the UK and a high profile in the in the mobile cellular telephony sector in Ireland, Germany and the Netherlands. However, in 2001 the telco decided to spin-off Cellnet as a separate company. it briefly became mmO2, before transmuting (sensibly) into plain old O2.
In 2005 Telefónica of Spain paid $ £17.7 billion to acquire O2 and the rest, as they say, is history.
BT's decision to quit mobile didn't make complete sense at the time and was regarded by some analysts as a classic case of short-term expediency winning out over long-term strategic sensibility. Once Cellnet was gone other mobile businesses followed in short order and although BT has since made some attempts to get back into corporate mobile services, they have been limited and half-hearted. The only one to come to some sort of fruition is an extant partnership with Vodafone. However, it is not regarded as an outstanding success and the deal will terminate when the EE partnership kicks in.
So now a real effort to get back into mobile as a real alternative provider is being made. Departing BT CEO, Ian Livingston, says the new service is "very much an Inside Out network that will make us different from other providers."
The new service will combine Wi-Fi with LTE and users will gain connectivity through small cells in domestic premises, Wi-Fi hotspots in cafes, bars, railways stations etc., and over traditional mobile antennae elsewhere.
In a press statement, BT comments, "We are excited about this partnership with EE as it will give us lots of options both in the business and consumer markets. BT already operates the UK's largest Wi-Fi network with more than five million hotspots, and we are keen to build on that platform".
In fact, Wi-Fi spectrum is under intense pressure as the ever-increasing amount of data traffic passing through hotspots threatens to overwhelm the system. That's why BT says it will adapt its 'Home Hub' routers to transmit LTE within households and offices. It is in the wider network that BT will rely on its partnership with EE to transmit signals.
Ian Livingston adds, "People tend to use their mobile devices for more high-intensity downloads when they are on the pause, when they are indoors. And we think that presents a great opportunity to combine Wi-Fi, to combine 4G and give basically the best connection when you are sitting down, when you are in your home and when you are in your business, when you are in a train station and when you are at an airport."
BSkyB has been blind-sided by developments and will be fuming, as will O2. The Spanish-owned telco was widely tipped as the favourite to share its masts with BT, partly because of its previous relationship with the UK incumbent and also because it recently contracted BT to provide its mobile backhaul.
BT isn't saying why it spurned its old partner but EE's lead in LTE services (a lead that was, contentiously, gifted to it by Ofcom when, despite much outcry from EE's competitors, it granted EE a de facto short-term monopoly as provider of 4G services in Britain) must have counted for a lot.
Nothing personal you understand. It's just business.