EE retains its brand in the new BT world

EE

With BT’s recent purchase of mobile giant EE receiving clearance from the Competition & Markets Authority, we have been curious to see how EE would fit into BT and whether they would lose their identity and become part of BT Mobile?

Following the announcement of the £12.5 billion acquisition on 29th of January, BT has announced the first details on the new organisational structure which comes into place from April 2016.

For EE this means being split in half:

•         The first half is led by EE’s new CEO Marc Allera and comprises of their mobile, broadband and TV services. This part of EE becomes BT’s sixth standalone line of business and interestingly will retain control of its branding, network assets and retail stores.
•         The other half of EE is its business operations, which will now be spun off into a new business unit, BT Business and Public Sector unit which will replace the current BT Business.

So it appears, at least for the short term, that both BT mobile and EE’s mobile offerings will be managed by distinct business groups within BT, each with their own brands, tariffs and marketing – and both being competitively sold to consumers.

“We will operate a multi-brand strategy with UK customers being able to choose a mix of BT, EE or Plusnet services, depending on which suits them best,” said BT CEO Gavin Patterson.

One wonders whether one of the underlying decisions in retaining the EE identify (perhaps a rather canny one in our view), may be down to EE’s brand strength. Cited against the more unwieldy BT Mobile brand, EE’s is perhaps the better recognised, which in fickle markets can cause change – and with the mobile market dominance they hold, any churn could be substantial.  Either way, we’ll see how well they continue to serve their respective customer base and how much more competitive their offerings might become in this new world of Chinese wall telecommunications.

BT’s EE acquisition now cleared by the Competition and Markets Authority

BT-EE

Last January we reported on BT’s £12.5 billion takeover of mobile provided EE. We had since been awaiting to hear from the Competition and Marketing Authority (CMA) whether this move would significantly harm the competition, in not just the mobile provider arena but in the Quad-play (selling a package of fixed-line phone, mobile, internet and TV) space as well.  Surprisingly, the CMA have granted BT the all clear in the EE buy out.

Both BT and EE are giants in their specialties with BT controlling 37.6% of the UK home phone market, 31% of the UK fixed-broadband market and EE holding 33.8% mobile market share. Together they hold 35 million customers between them.

Rivals, including Vodafone and TalkTalk had voiced concern during the acquisition’s original announcement calling for competition authorities to force BT to spin off its Openreach operation which maintains the UK’s copper and fibre communications cable network. This has since gone to regulator Ofcom for review for whether BT and Openreach should in fact be split up due to concerns their performance to other providers had often been poor.

The bringing together of BT and EE will likely see both cross-promotion and cross-sales between landline services and mobile.  One would assume that customers buying all their telecommunications packages from both BT and EE should get monetary savings and they wouldn’t want to lose by switching their mobile carrier next time round, something that is more frequent in the mobile world compared to consumers switching their landline provider.

Another matter yet discussed is the fate of the EE brand, being relatively young at just 6 years. Despite its size as the largest in the market, BT may not be able to resist the temptation in switching the EE brand for uncool BT Mobile. If this was the case, we could see some users switch back over to other mobile provides due to BT’s lack of lustre reputation in customer services and lack of historic expertise in the mobile arena next to O2, Vodafone and even now Three.

Is this really a fair and prudent decision by the CMA in what should be a competitive marketplace?

This week’s technology news – 6th February 2015

US ‘human firewall’ initiative to ward off cyber threats
American safety science company UL, has developed a behaviour focused education programme for their staff to help thwart the high proportion of cyber penetration emanating from phishing attacks through employee mistakes.

At its core, the programme trains employees to recognise and report phishing emails to their IT security department.  The heightened awareness and resulting engagement through this behaviour modelling programme, creates a healthy attitude towards understanding the importance of IT security within a company.  The dynamic ‘human firewall’ was found to be able to spot threats often within minutes, enabling IT security teams to take necessary action and communicate back promptly to the organisation.

The first step at UL was to educate employees on what a phishing attack looked like and a quarterly ‘planted’ phishing message was sent to every employee from CEO down that they were challenged to detect.  Employees were notified that there was to be a test, so as not to be a “gotcha” moment. If an employee fell for the scam, they were routed to a one-page lessons-learned offering two or three pointers on what to look for next time.

The second step was to get employees to report suspect emails. With personal responses to each individual reported attack, the initiative took off quickly and staff were recognised for saving colleagues and customers from attack.  It created a different conversation and improved relationship between departments.  Robert Jamieson, IL’s IT Security Officer believes the personal connect made all the difference. “Because there was no process or reason for people to think to report incidents or queries to us it used to take days or weeks to sort, whereas now the direct response is within 24 hours”.

With this programme, incident reports in UL increased from 10 per month to over 1,000 and the company has reported a 19% decrease in virus-related attacks.  This human firewall initiative is a final cog in the toolbox to many of the technology tools to defend companies from cyber attack – and the principles of what UL have achieved should give serious food for thought to all CISOs whether in a corporate or healthcare environment.
nationwide phishing

How much bigger can BT grow?
Late in 2014, BT confirmed they were in talks for a giant acquisition to take them back into the mobile operator game, with the purchase of their former company O2, or EE. The decision is made and BT has just paid £12.5 billion to acquire UK’s largest mobile provider, EE.

With BT now having both the largest mobile telecoms and fixed-line marketshare in the UK in addition to Openreach, BT’s infrastructure division, any rival telecom operators must go through Openreach to do business, making BT’s control and reach in the UK colossal.

The decision to move back into the mobile provider market isn’t surprising. Increasingly home users admit to only have a landline because they have to in order to get internet access it. Even at home the majority of calls are now made on mobiles instead of the landline. The deal more than trebles BT’s retail customers adding the 10 million BT already had to EE’s 24.5 million direct mobile subscribers.

The inclusion of mobile will also let BT provide “quad play” selling mobile, fixed-line, broadband and TV as a group of services.

UK competition authorities will be paying very close attention to this move but may need to take a different look than usual. Normally mobile and fixed-line markets are analysed separately. If done here, EE is not larger after this acquisition than before, however if competition authorities look at this alongside BT’s numerous non-mobile communications services, the strength BT could potentially apply on overlapping markets would give them significant advantage.

The EE buyout is expected to be finalised by March 2016, subject to shareholder approval and competition authority agreement.  Meanwhile, rumours are that mobile operator Three is in talks to buy O2.  That gossip along with Vodafone rumoured to buy Virgin Mobile, ensures that the telecoms world will be a very busy and potentially contentious commercial space in 2015.

BT-EE