BT and EE have confirmed that they’re talking – but they won’t say about what. It’s rumoured that the two companies are discussing a merger.
This could involved BT absorbing EE’s mobile network, a move which would make the UK’s biggest ISP the UK’s biggest mobile network as well. Or it could see BT buying up all of EE’s UK operations – mobile, landline and broadband – in one go.
At the same time, BT is also talking to O2, the mobile network which was once known as BT Cellnet. Nothing’s confirmed, but it’s rumoured that BT is also weighing up buying its old network back off of Telefónica.
Any bid from BT for either will have to be eyed over and scrutinised by telecoms regulator Ofcom. BT is already a big player in the UK market and buying EE or O2 will give it even more clout.
Pending an OK from Ofcom, here’s the reasons why we think BT might end up plumping for EE over O2. That’s assuming BT can make a decent enough offer…
Faster rollout of superfast broadband
The UK Government wants superfast broadband – any connection that can deliver download speeds above 24Mbps – to be available to 95 per cent of the country by 2017.
BT has been charged with making this happen and as of June 2014, according to Ofcom, 78 per cent of UK properties can order superfast services from at least one provider.
While BT is confident that it will meet the 2017 deadline, being able to offer customers fixed-location 4G, like EE does in parts of Cumbria right now, would see it able to reach remote communities more quickly.
Digging up roads and laying undersea cables is prone to mishaps and delays. 4G broadband could give rural customers a superfast lifeline sooner rather than later.
Improved superfast broadband speeds
If BT bought EE, its mobile customers could be enjoying better speeds on their phones and tablets than they would on fixed-line services.
EE’s LTE-A services, or ‘4G+’ as they’re calling it, promises average download speeds of 90Mbps – that’s above the theoretical top speed currently possible with BT’s FTTC (Fibre to the Cabinet) connections.
EE’s 4G is only going to get faster as well. As of next year it’ll be experimenting with up to 400Mbps 4G in Wembley Stadium with a view to eventually rolling that out across the rest of the UK.
Faster rollout of 4G – MiiS and micro cells
EE is on track to bring 4G services to 90 per cent of the UK soon – by the end of the year or early 2015 at the latest according to director of network services Tom Bennett.
It aims to achieve at least 98 per cent coverage ultimately, but as with fixed line rural rollouts, getting to the last 8 per cent in remote regions is always the hard part.
Earlier this year, BT unveiled something called MiiS – short for Mobile Infrastructure Infill Solution. Nice name.
In a nutshell, MiiS will let mobile operators like EE use BT’s telegraph poles and street cabinets as mini mobile masts.
As BT does the hard work of setting up fibre broadband connections in remote parts of Wales, Cornwall and elsewhere, EE could plant 4G base stations on BT’s own infrastructure. This would kill two birds with one stone.
It’s still in the early stages right now and won’t necessarily be released anytime soon. If it is released, we hope MiiS gets a better name.
EE hasn’t been wasting time coming up with it’s own solutions. The network has announced plans to install roughly 1,500 micro cells across the country. These are designed specifically to plug not spots and can be set up virtually anywhere in just a few hours.
BT becomes a true quad play provider
If BT bought EE it would finally become a full quad play provider. Like rivals Virgin Media and TalkTalk, BT would be able to offer customers home broadband, digital TV, home and mobile phones in big shiny bundles.
It would also be the UK’s first ‘true’ quad play provider in the sense that it would own the mobile network it’s using – both Virgin Media and TalkTalk operate virtual mobile networks that use EE and O2 respectively.
Buying EE would therefore see BT effectively supplying rivals Virgin Media with a mobile service.
The same of course would be true if BT bought O2; it’d be able to offer customers more options while making money from TalkTalk Mobile instead.
BT cements its position at the top of the broadband market
If BT were to buy all of EE’s assets – that’s the mobile and fixed-line customers – it would solidify its position as the UK’s biggest ISP by subscriber size. BT currently has 7,473,000 broadband customers and EE has 793,000.
BT’s nearest rival in terms of numbers is Sky, which at the last count has 5.3 million customers. Virgin Media sits in third place with 4.5 million while fourth placer TalkTalk has 4.2 million.
EE, currently the UK’s fifth largest ISP, could be taken out of the game and BT’s broadband customer headcount could swell to 8.2 million, putting it head and shoulders above the rest of the pack.
YouView rival EE TV is taken out of the picture
The recently launched EE TV service is an interesting proposition. It’s a subscription free TV service that comes with a lot of smart TV features like second screen viewing on multiple mobile devices and a 24 hour Replay feature on up to six channels.
With access to catch up services like BBC iPlayer and Demand 5, and more things like Connected Red Button in the pipeline, it could steal some of YouView’s thunder.
However if BT, a YouView shareholder, were to buy EE, there’s a good chance that this nascent TV service will get taken out of the picture.
BT is already hamstrung by a complicated spat with Sky over Premier League football, which sees the company only able to offer TV customers who want Sky Sports the last-gen BT Vision service, instead of its newer, slicker YouView proposition.
Until that dispute is resolved, it’s unlikely that BT will want to add a third TV box to its repertoire.
Possible development of multipath service for even faster speeds
Finally – and this is just a vague possibility – if BT bought EE it would be well placed to launch a combined fixed-line and 4G broadband service. Irish startup Multipath has already demonstrated that such a thing is possible.
This could help out in areas where the top speeds possible on an FTTC connection are nowhere near that 80Mbps spot, due to last mile distances, but 4G reception is strong.
If BT was to take a leaf out of TalkTalk’s book and turn future Home Hubs into femtocells it could launch a hub that provides better indoor voice call coverage as well as bringing more bandwidth into the home.
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