Brit mobile firms in FOURPLAY TUSSLE – how very French of them

Orange, SFR, Bouygues et Free have been there, done that

The French story

We noted that Vodafone is impatient to have fixed line support for its cellular services in all of its major markets and that the UK remained the weak spot in this fixed line strategy. Having fixed lines allows it to build out Wi-Fi offload and to backhaul cellular small cells in its four major home markets of Germany, Italy, Spain and the UK, where it respectively holds 5.2 million, 1.8 million, 2.7 million fixed lines and in the UK a meagre 62,000. Our take is that Vodafone will go straight for fibre in the UK, with perhaps a secondary ADSL/VDSL offering wholesale via BT.

Back in early October headlines focused on BT moving back its quad play launch until deep into 2015, due to some technical difficulties it was having on WiFi Voice. It has an MVNO with EE, having been the only fixed line incumbent in Europe to be stupid enough to sell off O2 its mobile operation to Telefonica back in 2004. BT’s operation is clearly supposed to be WiFi First based and therefore price disruptive.

Since then the story broke that EE is also chasing the Quad play. For the uninitiated, EE is the largest cellular operator in the UK, a merger of Orange and T-Mobile, created to overturn the lead that O2 and Vodafone enjoyed in the UK. It has the backing of Orange, which is strong in TV in its own country, Poland and in Spain while its other parent Deutsche Telekom has pay TV operations in Germany, Croatia, Greece, Romania, Hungary and Slovakia. Collectively in TV these two businesses are almost as powerful as BSkyB or Liberty Global.

The other issue is that Orange has the experience of surviving the triple play wars in France, the only the place in Europe which grew up habitually offering free TV to broadband customers. The result of this is that it uses “boxes” which typically offer a full triple play in a broadband gateway acting as a set top, a VoIP controller as a matter of course. In France the four telcos – Orange, SFR, Bouygues Free – and are now fighting it out with Homespot Wi-Fi undermining cellular pricing as well.

This EE service in the UK will be backed by a device and software from Netgem, in its first deal in the UK. It naturally hopes this will be an invasion of the French way of doing things. Netgem was the traditional set top supplier to SFR and has a great understanding of hybrids, especially mixing one broadcast service with one over the internet and adding VoIP and an advanced pay TV UI.

This will give UK homes a taste of what’s on offer in France, with a second layer of OTT services offered directly from the cloud to portable devices with the same viewing on them. The box has 1 TB of storage and four tuners to reach up to four TVs, and up to three further portable devices can have access to video simultaneously with the TVs.

The EE service will come to market with 70 free to air broadcast channels plus a neat 24 hour replay feature, as well as additional online delivered on-demand channels and more than 10,000 TV series and movies, all for under £10 a month for existing EE phone customers.

This week the news has broken that Vodafone will also partner with Sky, something that we suggested when we revealed the Vodafone broadband plans a few weeks back. Vodafone has had a long relationship with Sky for video content on mobiles and will no doubt find Sky willing to negotiate on channels locally. In other markets Vodafone has been a Netflix reseller, and it looks like it will initially line up reselling agreements for Sky Now, Netflix, and other OTT services, for a quick start in video.

It seems like many of these same incumbents are positioning themselves for similar battles in Italy, Germany and Spain, having already shaken up the French market. 2015 seems to be the UK’s turn to discover just what Quad play can do to an operator landscape – our feeling is that not much of it is good (for the companies), but failure to stay in the race is even less thrilling. The whole thing is great for consumers.

The outlook for both the existing Freeview channels in the UK, with multiple broadcasters such as ITV and Channel 4 in advertising wars in the Free to Air market, and for 3 Group, the fourth placed UK MNO, which has no fixed line strategy that we can see in the UK, must be seriously in question.

Meanwhile in the famous French quad play battle, SFR has escalated its offering, working with the fibre part of the Numericable network, even before their merger is signed off. It has a new box and offers internet speeds of 200 Mbps over the Numericable network, but under the SFR brand. The new SFR offer will be priced at between €30 and €42 depending on the precise package, and it is is roughly 10 times the speed of its old ADSL lines.

SFR will offer TV from Numericable with 67 channels, supporting picture-in-picture and the ability to simultaneously record two streams to a 500GB hard disk, as well as give access to a 30,000-strong VoD catalog. The box will naturally also provide access to SFR services such as home-security offering and cloud-storage. The box supports HD, has 802.11ac and is called “La Box TV Fibre” with a mobile plan with 5GB or more of data. The phone additionally offers the Canalplay streaming TV service, Napster mu-sic, iCoyote traffic warning system, SFR games, LeKiosk magazines and newspapers and the mobile app of sports newspaper l'Equipe. This Quad play offer can be bought by any one of 8 million homes within the Numericable footprint.

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