BSkyB buys Telefónica's UK broadband business

The satellite and, more latterly, broadband to the home provider, has purchased Telefónica-owned mobile operator, O2's home and BE broadband businesses. The financially challenged Spanish giant has been looking to shift its focus in the UK market and the unit is understood to have been up for sale for some time.

It means BSkyB adds half a million subscribers and leap-frogs arch-rival Virgin Media (which owns the UK cable business) to become the second-largest broadband provider to BT in the UK, which of course has recently been busy buying TV rights and getting further into the broadcast business by purchasing ESPN’s UK and Ireland TV channels.

The O2 broadband purchase has cost BSkyB a relatively modest £180m (another £20 million payable if most of the customers come and stay).

The move is not an earth-shaker but observers say it's a graphic illustration of the steady consolidation of the UK market into a 'three-horse' home entertainment market, with each of the 'old' vertically integrated network providers - BT with its telephony network; Virgin with cable; and Sky with satellite - fighting it out. The goal is to get an armlock on what they hope will eventually be a highly converged pay TV and broadband to the home market.

At Mobile World Congress in Barcelona this week, the interactive multi-screen environment of the near future all three are seeking to dominate, was on show in different guises and on multiple booths. Keep watching our video line-up over the next week.

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