How Will Sky’s Entry Into Mobile Shake Up The Market?

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Sky is to launch mobile services in 2016, but how will it impact the UK telecoms space?

Last week, Sky announced its intention to provide 2G, 3G and 4G services to customers after agreeing a Mobile Virtual Network Operator (MVNO) deal with O2.

The network will launch in 2016, allowing Sky to compete with Virgin Media, TalkTalk and BT in the ‘quad play’ market.

With BT buying EE and Vodafone announcing plans to offer consumer broadband services, the absence of mobile from Sky’s portfolio was seen as a weakness in a telecoms market heading towards convergence.

We asked a number of mobile experts what Sky’s entry into the market means for the industry.

Martin Scott, head of Analysys Mason’s Consumer Services research practice

Sky Go ipad“This move will leave Vodafone and TalkTalk with more-apparent underdevelopment in their portfolio. With a potential tie-up between EE and BT in the works, this move further evolves the UK telecoms market into one of a limited number of converged ‘big hitters’ with Vodafone and TalkTalk left with underdeveloped service portfolios: Vodafone has indicated unrealised aspirations in the fixed consumer market in the UK and TalkTalk has successfully sold mobile to only nine percent of its customer base to-date.

“Sky could become a market disruptor, especially if BT’s appetite for change is dulled by the acquisition of EE. BT has a desire for disruption: it has followed the launch of BT Sport with an ‘inside-out’ business model for mobile operations, with the fixed network playing a leading role in supporting and delivering mobile services.

“By acquiring EE, BT would become the largest fixed operator and one of the largest mobile operators, with little incentive to disrupt the quad-play market (it would have the most to lose). Sky has previously proved its ability and willingness to disrupt the telecoms market (notably its low-price high-speed broadband services); quad-play, and converged fixed-mobile services, could be Sky’s next logical move.”

“Launching mobile services will certainly aid Sky’s defence against stronger converged plays from Virgin Media and BT in 2015 and beyond.”

Ewan Taylor-Gibson, telecoms expert at uSwitch

mobilead“Sky is keeping up with the Joneses – Virgin Media, TalkTalk and potentially BT later this year – to become the latest telecoms giant to offer all four services.  With Sky piggybacking off O2’s network, which also provides services to Tesco Mobile, the tie-up could be bad news for Vodafone, which had been seen as a leading contender for a wholesale partnership with Sky.

“Quad play is proving all the rage amongst telecoms providers, but mobile often seems like the afterthought of these four-way bundles. Many customers are already tied into long contracts so aren’t in the market for a new mobile deal.

“The advantage is that all your services are under one roof, making billing far simpler, but if one service isn’t up to scratch, it can be harder to leave.”

Dominic Baliszewski, telecoms expert at broadbandchoices

“It was a foregone conclusion that Sky would ensure its place at the mobile phone buffet and this deal with Telefonica UK adds the final missing piece to the puzzle of Sky’s comms offering. Going down the wholesale route rather than buying their own network outright means Sky could have less flexibility in the way they sell mobile packages but they are likely to mitigate this by leveraging their broadcast content which is already increasingly viewed via mobile devices.

“When the dust settles and packages become available it is important that customers are given clear information to help them understand how these deals are structured, priced and delivered if they are to avoid signing up to something that they don’t really need.”

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