Furthermore, BT is a large fixed player moving into the mobile broadband domain. Until now, the UK market has seen mobile players launch fixed broadband services, but only Virgin Media (which already had a mobile arm) move in the opposite direction.
As a result, BT is able to leverage its strength in fixed broadband, which makes this stand out from the ‘me too’ mobile broadband offers that have flooded the UK market over the past 18 months. For example, the offer comes as part of a bundle including fixed and mobile broadband, as well as unlimited Wi-Fi hotspot access and other broadband ‘value-added services’, such as free security and online back-up.
So, BT really has an opportunity with this product to finally do something in the mobile domain that has some consumer appeal. Unfortunately, BT would not be drawn on the broader topic of its mobile strategy, so we are not sure to what extent this heralds a new dawn for it in mobile.
Multiple technologies highlight client software
BT has taken the same approach to connectivity management software as Vodafone’s recently launched Zero Click Connect. This is another sign that mobile broadband client software will take a much more holistic approach to connectivity in the future, playing into the hands of integrated players.
Although switching between network technologies is not automated, like in Vodafone’s dashboard, the client software recommends the best available connection across home Wi-Fi, Wi-Fi hotspot and mobile. This plays to the strengths of BT’s extensive Wi-Fi hotspot network, while minimising consumers’ excess mobile usage charges – particularly as the 1Gb mobile data allowance is less generous than many tariffs on the market.
Providing value will make margins difficult
We raised this concern with BT, but it was naturally adamant that the mobile broadband element is financially viable as part of the bundle. We still think that with a limited mobile broadband allowance, power users may well be dissuaded by excess usage charges. This will limit uptake by the most valuable mobile broadband customers.
Also, in a market as competitive as the UK, particularly in light of current economic conditions, BT is likely to face immense competitive pressure to increase its inclusive data allowance. If it does, this will harm both incremental top-up revenues and margins. The increased data usage will no doubt need to be paid for at wholesale rates, even though revenues decline as a result.
Steven Hartley, Senior Analyst, Mobile practice