UK telco BT has announced phone and TV service bundling deals with BSkyB and ITV Digital.
BT, the UK’s dominant telecoms operator, has announced deals with digital TV operators ITV Digital (formerly ONdigital) and BSkyB. The offers, which BT will support with a GBP10 million marketing campaign, will give BT customers cut-price access to the digital TV services.
The deal is an attempt by BT to cut the number of telephone customers it loses to cable operators, who can provide phone and digital TV services at lower prices than subscribing separately. So it seems like a sensible move, reducing the incentive for BT customers to defect while also giving BSkyB and ITV Digital preferential access to BT’s 20 million landline customers.
In the longer term, however, the alliance will do little to help BT. All the digital TV operators plan to offer truly interactive TV (iTV) services using broadband Internet connections. Cable operators NTL and Telewest will be able to do this using their existing networks, thus adding broadband to their existing phone and TV packages.
This route won’t be open to BSkyB or ITV Digital; instead, they will have to deliver broadband services through DSL, which uses BT’s phone network. This brings up the possibility of BT allying with one or the other to offer their TV services whilst also selling its video on demand and other iTV offerings.
But this plan isn’t realistic. Local loop unbundling, which will allow rival operators run DSL services over BT’s local phone lines, will destroy the incentive for the digital TV operators to deal with BT. Voice telecoms and broadband Internet services will become a commodity that BSkyB and ITV Digital can buy from BT or its rivals and offer direct to their customers, rather than having to share content revenues.
BT is highly unlikely ever to be a serious TV content provider. The best the company can hope for in these arena is that the digital broadcasters will be interested in deals that give them further access to its customer base.
