BT Expected to Start 4G Price War

A 4G price war is predicted when BT launches its own mobile network within the next year. Following its radical approach to TV sport, which has included offering free access to live Premier League football on BT Sport as part of a broadband subscription, other 4G network operators are expecting a tough challenge from the new BT 4G network when it arrives.

BT to launch 4G network

BT is returning to the consumer mobile game eleven years after saying goodbye to O2, and its new network is likely to reshape the market. According to Gavin Paterson, CEO of the BT Group, “Customers can see that we’ll be able to shake up the market, be that the business market or the consumer market. They’ve seen what we’ve done in sport and see the potential for us to do something similar in the mobile market.”

Just last week BT announced that its considerable investment in TV sport had resulted in the first annual revenue growth in its consumer business for a decade. BT’s aggressive entry into the TV sport arena has been seen as a rear-guard action against BSkyB’s attack on the broadband market, and has increased BT’s share of new subscribers while also slowing its churn rate.

So what can we expect from BT’s 4G network?

Back in March BT signed a multi-year contract with EE, who will provide various MVNO services to BT customers, but this is only part of the story. BT is planning to combine this with its existing network of more than five million wi-fi hotspots, as well as its own 4G network using spectrum bought in the Ofcom auction. Through its subsidiary Niche Spectrum Ventures Ltd, the BT group bought 2 x 15 MHz of 2.6 GHz and 1 x 20 MHz of 2.6 GHz last year.

Because BT intends to upgrade customer’s Home-Hub equipment to broadcast 4G as well as wi-fi signals, the majority of voice calls and smartphone internet traffic will be able to go through its fixed line broadband network. The company is currently working with various mobile microchip vendors to create the new Home-Hub. BT expects this to create a high quality hybrid network that is particularly well suited to activities such as video streaming, for which 4G is well known.

This setup will allow BT to offer cheaper 4G rates, undercutting other network providers and offering bundles for mobile, broadband, phone, and TV. This could present a problem for other 4G providers, who have invested heavily in their 4G networks, and need to recoup these costs through higher charges for 4G services.

BT is still working through some technical challenges, although Patterson states that. “These are challenges but they are very deliverable and we don’t see it as anything that’s putting the programme at risk.” The business mobile network is expected to be launched within the next three months, and consumers should be able to sign up to 4G from BT by April 2015, so it will be interesting to see the impact that this has on the 4G market as a whole.