O2 comes full circle with fixed voice services

by Caroline Gabriel, Rethink Wireless

A decade ago, wire-free operators like Vodafone were seen as the golden geese of mobile, unencumbered by legacy copper. But now, a large part of carrier growth comes from offering bundles of fixed and mobile services to gain a greater share of customers’ total telecoms/media spend, and reduce churn. So we see O2 UK, mobile-only since being spun off from British Telecom in 2001, coming full circle and deciding to provide fixed line calls.

O2, now part of Telefonica – which has been moving towards bundling and full quad play in its native Spain and other markets – will offer fixed line voice services for residential customers from March. These will be available as bundles with its mobile and broadband offerings, taking O2 head-to-head with other converged operators in the ultra-competitive UK, such as its former parent BT, and TalkTalk Group (both of these have to rely on MVNOs for their mobile elements).

O2 will offer two home phone packages to its residential broadband customers, costing £9.50 ($15.50) and £12.50 a month, respectively.

The firm’s marketing director, Sally Chowdry, said in a statement that the move was “part of our strategy to evolve beyond mobile to a leading connectivity brand”.

Last September, BT’s wholesale division signed a deal with O2 to provide fixed line voice calling for O2’s small business customers. However, BT analysts were unflustered by O2’s move, pointing out that although the incumbent is the market leader with 14m fixed line customers, voice calls are now only about 10% of its group revenue and falling. The value of adding voice will not be about substantial new revenues for O2, but the chance to own the customer relationship and keep users tied to it for all communications/media requirements.

TalkTalk, part of Carphone Warehouse – which is second placed behind BT and is developing a quad play, having acquired an IPTV platform with its purchase of Tiscali UK – said it did not see its position being threatened by O2.
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