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?

Transparency sought in the Cloud storage market

The Competition & Markets Authority (CMA) is to investigate whether consumers are being unfairly charged for their cloud storage services.  The regulator’s focus is mainly on:

• Unexpected price increases after a contract has been taken out
• Changes or reductions to unlimited storage capacity deals
• Consumers’ data being lost or deleted
• How contracts are automatically renewed at the end of the period
• What happens to consumers’ data when they cancel a contract

With a far wider range of devices now providing storage services (laptops, mobiles and tablets) with demand access from anywhere in the world, it is of little surprise to hear from the Office of National Statistics (ONS), that 40% of UK adults now reportedly use some form of Cloud storage.

The price of Cloud storage is flattening to near zero levels, so many storage providers are offering interesting deals to lure internet users in off the back of tie-ins to more lucrative profit margin services (ie. Amazon Prime and Amazon Web Services).  However, often it’s the small print that trips end users up, because unlike enterprise storage, it doesn’t have to be smart or require management.  These inflated costs to change use volumes or content type can prompt significant excess costs (ie. a user seeks to store videos versus just photos or documents).  The initial free memory included in the bundle, pales into insignificance when top up charges of up to £40 per month for needed extra gigabytes are incurred.

The investigation may result in enforcement action using consumer protection laws, as well as the regulators seeking voluntary change within the sector and guidance to business.  With the new Consumer Rights Act having taken effect in October 2015, price transparency has been tightened, so expect changes in the market to follow.

The question is whether this consumer experience could manifest itself in the higher margined enterprise zone in the future potentially as behaviours do tend to follow in markets?   When a deal sounds too good to be true, it often is.  For MSPs, the answer will come if we start to see cloud providers offering bundled packages that are smart to organisations and include the necessary high performance and high availability for large amounts of data, but at more transparent, reasonable prices.

Cloud 10@300