A huge shift is underway among Europe’s incumbent carriers – and it could have a profound impact on the IT infrastructure on the continent. The telcos are finally understanding that to grow, they will have to squeeze revenue from a market that until now they have tended to ignore: their existing customers.
BT and Microsoft have formed an alliance in UK broadband Internet.
BT Group’s traditional response to criticism that it has dragged its heels in rolling out broadband services has been, predictably, that there’s no demand. Instead, over the last few years it focused on the abortive Concert joint venture with AT&T, while spending billions on 3G licenses to fulfill ambitions to become a major European mobile carrier.
Effectively, BT’s growth strategy was to do overseas what it was already doing at home: a policy bound to end in tears, not least because a stock market downturn meant that it could not raise the cash to keep up its ambitions. The company was also hindered by its lack of skills and experience in operating in markets where it was not the dominant player. The result, both in Concert and in mobile telecoms, was disaster.
However, BT is now beginning to move in the right direction. It has slashed its debts and refocused on its huge existing customer base, teaming up with Microsoft to sell broadband Internet services. The move should prove fruitful – as an incumbent carrier BT has a direct link into virtually every home and business in the country.
Meanwhile, Microsoft has been swift to see the way that this could be used to leapfrog over its competitors. The alliance that will focus on five areas: multimedia home computing, productivity and flexibility for large organizations, mobile computing, web services, and portals.
Microsoft is expected to unveil similar alliances other incumbents looking to use home market clout to grab as large as possible share of customers’ spending. And it seems somehow fitting for a local monopoly to link up Microsoft, a company well known for its ambitions to dominate every market it enters…
Related research: Datamonitor: Telcos in the broadcast sector (BFTC0785)
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