Telecommunications giant BT has been in the news a considerable amount recently, especially when it comes to their broadband services. Many are claiming that the company is unfairly monopolising the market while not providing customers promised service levels, which is why they may find it surprising that the company is planning on expanding into the mobile industry.
In just a few weeks there have been a number of developments concerning BT, with the first being that they are looking into buying the mobile phone operator O2. Since selling the company back in 2001 BT’s share of the mobile market has dropped considerably, however now they are looking to take it back. In a statement to the stock exchange the company said: “We continue to develop our own plans for providing enhanced mobile services to business and consumer customers. We have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the UK.”
Not long after the company confirmed that they were in talks to purchase O2 another story broke stating that the company is also contemplating purchasing EE – the largest mobile phone operator in the UK. This second announcement had a massive effect on the global stock exchange, with Deutsche Bank’s telecoms analyst Robert Grindle saying: “The horse has bolted out of the stable door. The market now is going down a convergent route. The competitive forces have been unleashed and things are going to have to shake out.”
The fact that BT is looking to head back into the mobile market may be a reaction to the fact that fewer households are now using their landlines, which has caused BT as well as its competitors TalkTalk, Sky and Virgin Media to increase their line rental prices. As of next Monday BT customers will see their landline rental charges increasing by 6.25% to £16.99 per month, however the company claims that this is all part of their annual review and not a reaction to fewer consumers using their landlines. A spokesperson for BT added: "Whilst call volumes are going down, the number of landlines is going up.”
It is unlikely that those in the telecommunications industry will believe BT’s claims that their foray into the mobile market has not been spurred on by an increasing reliance on mobile phones, which is why many are already putting measures in place to block BT’s bids. In fact, rumours are already abound concerning the company Hutchison-Whampoa who own the Three mobile network and are apparently planning on trying to outbid BT in the purchase of O2 and EE.
There are those that are supportive of BT’s move however, most notably their stakeholders. However, its customers may not be so keen for the company to expand into another market, especially those that are currently receiving low-quality broadband. In fact, just this Monday BT issued a statement to customers acknowledging that many were experiencing issues with their broadband connections. On the website it stated: "We're aware of an intermittent issue that's affecting some broadband customers, our engineers are working to resolve this as quickly as possible."
BT’s reputation is far from ideal, which is why many are concerned over their bid to buy two of the biggest mobile phone operators in the country. Furthermore, this means that consumers will have less choice when it comes to their landline, broadband and mobile network providers due to further monopolisation of the market. At Fluidata we have often highlighted the issues that a monopolised telecommunications market presents, which is why we expect for there to be further commentary on this proposed buyout from market leaders over the next few weeks.