Broadband Suppliers Should Get Ready for Takeover Offers

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Experts now predict that the industry is about to see a period of consolidation, where more ISPs are taken over and the broadband market starts to merge with other markets, including mobile telephony.

The UK broadband market is notoriously crowded but has become smaller over the last few years, as a minority of very successful Internet Service Providers (ISPs) have begun to dominate the market. Experts now predict that the industry is about to see a period of consolidation, where more ISPs are taken over and the broadband market starts to merge with other markets, including mobile telephony.

Chris Eagle, Commercial Manager at top UK broadband comparison site http://www.broadbandchoices.co.uk explains, “the UK broadband market is still very crowded in terms of ISPs, and you have some big winners and some also-rans. A period of consolidation makes sense for businesses and consumers, as traditional mobile operators have the global financial muscle to buy out some of the smaller UK broadband ISPs.”

The convergence between mobile, broadband and fixed line operators has already begun: NTL already owns Virgin mobile and Wanadoo is re-branding to Orange. For consumers, this means that you’ll soon be able to pay for all your communication – internet, home phone and mobile - on one bill. Are Vodafone, O2 and 3Mobile at risk of being left behind as the bundle becomes ever more prominent as a marketing strategy?

Eagle comments, “T-Mobile has announced its intention to offer a wireless broadband service via 3rd generation mobile networks, and the TalkTalk ‘free broadband’ offer has redefined customers’ expectations in terms of value for money. The telecoms companies are trying to secure long term relationships to recoup the amount they have had to pay to entice new customers in. Therefore they need to be able to offer broadband, mobile and fixed phone lines so that customers have a ‘one-stop shop’ for their communication needs.”

The UK broadband market is currently in the middle of a price war, which has led to some clever bundling of products. To date, this mainly means fixed phone and broadband services, but why not add mobile and TV content into the mix? BT is expected to launch a TV-over-broadband product shortly and Channel 4 now offers new episodes of Desperate Housewives and Lost via its website.

BroadbandChoices’ Eagle asks, “Why would mobile operators launch a new broadband service when they could buy market share with the infrastructure and expertise already in place? It’s obvious they will follow Sky’s example of buying EasyNet/UKonline.”

Recent press reports have also suggested that Vodafone and O2 are looking to enter the UK’s fixed line marketplace, simply to acquire broadband customers. Telefonica, the parent company of O2, is Spain's largest provider of internet TV services, and this will surly push O2 to either enter the UK market independently or acquire a leading UK ISP.

Eagle states “you may also find that if Channel 4 viewers have an appetite for TV over broadband, some of the other commercial broadcasters may decide to have a closer look at some ISPs, because at the moment the advertising potential of this distribution is largely being ignored.”

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James Bergin