Ovum Questions Financial Viability of BT’s New Package
Software and telecom consulting firm, Ovum, has cautioned BT that its new broadband bundle may end up being a loss making venture for the company. The bundle is being marketed as the cheapest of its kind in the UK.
The deal that is causing concern to Ovum is offering BT customers up to 8Mbps fixed line broadband access at home along with 1Gb usage on BT mobile broadband and free access to WiFi hotspots. All this comes at £15.65 a month, which means that over the full life of the contract, this deal turns out to be cheaper by about £125 than other competing packages from providers like Virgin and Orange.
Steven Hartley, an analyst with Ovum, says that BT will lose money with this offer. He points out that BT does not have its own mobile broadband network and hence has to piggyback on Vodafone’s network, which incurs a hefty fee. So even though BT is a big player when it comes to the fixed line broadband market, it can not leverage that advantage in this offer. The company still has to bear the highest cost per Mb for providing mobile broadband services when compared to other UK providers, Hartley said.
Ovum has informed BT of its analysis but the company is determined to forge ahead with the offer despite the warning. It has asserted that the deal is not only financially viable but will also rake in significant profits.