We’ve spoken before on this blog about the fragmentation of the European telco marketplace and the inevitability of consolidation. As LTE proliferates, mobile network operators stand to make significant savings as a result of merging and sharing spectrum, reducing competition at network level and delivering consumer benefits in the form of higher access speeds. The recent Orange bid for Spanish carrier Jazztel, however, highlights another current consolidation trend amongst MNOs – that of increasing their service offering to a triple, if not quad, play to complement mobile broadband with fixed line services.
From Orange’s perspective, Jazztel has a very strong internet access proposition, and will allow the company to keep up with Vodafone’s acquisition of Ono to deliver both mobile and fixed line services. In addition, it will challenge Telefónica’s dominance in the Spanish market following the launch of its “Fusion” fixed-mobile package in 2012. According to an FT report, the acquisition of Jazztel will increase Orange’s Spanish broadband market share by 14 per cent, gaining 1.5m broadband subscribers, and mobile market share by 3 per cent.
Orange and Vodafone aren’t the only examples we’re seeing of this trend towards triple and quad play initiatives. TDC in Denmark has recently agreed to acquire Norwegian cable company Get, while 2013 saw the merger of Portugal’s largest cable-television provider Zon with Optimus, the country’s smallest mobile operator – allowing them to compete against Portugal Telecom and Vodafone.
As we can see, MNO strategy is evolving from a focus on the provision of cost -efficient and user -friendly mobile services, to the delivery of everything a subscriber needs – from mobile to fixed line internet and even content. This process is being intensified and driven by technology and LTE growth. Consumer demand to access more and more from the smartphone or tablet device is placing more pressure on operators to offload in-building traffic to supporting networks, relieving mobile network pressure as well as assuring a good user experience.
It is therefore becoming increasingly important for mobile players to provide a fat pipe to subscribers’ homes, placing an increased importance on the evolution of Wi-Fi 2.0, unlicensed spectrum and femtocell deployment in the context of mobile broadband. As higher bands become available in the 3.5, 3.6 and 5Ghz spectrum, operators will look to their short range nature to provide an excellent solution for their indoor coverage strategies. Whilst we’re yet to know the outcome of this spectrum availability, we do know that big changes are on the horizon for MNOs, and Orange’s bid for Jazztel is likely to be one of many operator strategy moves.
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