Improving the quality and performance of Consumer’s pay-TV business is a key element of the division’s new strategy, and will be built on the idea of becoming a content “super aggregator”.

Through better relationships with rivals such as Sky, and closer alliances with OTT players, the division hopes to become a one-stop shop for customers’ entertainment expectations.

As noted already, BT is keeping faith with YouView to support its super aggregator plans, with the set-top box operating as a central hub, and the BT TV remote being the controller for all types of access.

Meanwhile, EE is taking a mobile device-led approach, with access through mobile apps, and the potential to cast streamed content to other devices, being made widely available.

The division is to redouble efforts to promote BT Sport, with plans to offer customers access to the service in high definition and compatibility with casting onto a television screen for £15 per month. While a fairly hefty sum for a mobile-based service, it does compare favourably to the £30+ cost of a BT Sport HD subscription without a BT Broadband contract.

BT talking its TV offering down to build it up

Marc Allera suggested that Consumer’s pay-TV customers can currently access 30% of the most relevant content through the service, but the expansion of partnerships could take that figure nearer to 100%. The basis of the initial claim was not expanded upon, but appears suspiciously low.

With Netflix already on the BT TV platform, major broadcasters’ on-demand players available, and even Sky Cinema and Sky Sports available for (expensive) subscription, the deficit does not seem as substantial as Allera claims. Sky’s television entertainment channels such as Sky 1 and Sky Atlantic are high profile, and Amazon’s Prime Video is gaining traction, but the notion that adding them would fill a gaping chasm in BT TV customers’ viewing experience appears exaggerated.

It may be truer to say that Consumer only has an opportunity to generate meaningful revenue from a minority of the most in-demand content, and that the level of customer convenience may currently be lower. It appears to BTwatch, though, that the division may be looking for excuses for current pay-TV weakness, and that by suggesting there is a dearth of content currently it may be hoping to portray imminent future content availability as more of a fresh start than it actually is.

What’s so super about aggregation?

The merits of being a super aggregator appear ill-defined, although Consumer has played up being able to offer a single bill, and an integrated search engine and user interface. The extent to which this convenience (which rivals also appear to be developing) can be transformational and contribute meaningfully to profitable revenue remains to be seen.

However, for the moment, the telco’s key priority appears to be ensuring that it stays in the TV platform game.

BT Sport: Modern sport all about the money

Consumer is developing a broader, further reaching approach to making money from its pay-TV sport channels. BT has always made BT Sport available to non-BT customers, but the new attitude suggests a potentially more aggressive stance.

BTwatch has previously suggested that BT Sport needs to operate as a more standalone business, and questioned whether its place within the Consumer division is the best approach for both the broadcast unit and the larger business (BTwatch, #293). The new management appear to be taking another step in that direction with greater emphasis on BT Sport paying its own way, and not being a glossy but expensive value-add on a standard telephony package.

During the presentation, it was claimed that monetisation was already proving effective, and more than covering its costs. However, in a chart presented by Consumer, it was clear that measurable income from customer subscriptions, advertising, and wholesale deals with other broadcasters cannot match the substantial cost of securing rights and maintaining the broadcast channels.

According to the Consumer graphic (which, it should be noted, was flagged as being for illustrative purposes only), it appears that, without the halo financial benefits for “linked core product revenue” and the perceived improvements in customer stickiness, BT Sport is under water and not sustaining itself.

To address this, Allera is committed to making more from distribution of BT Sport content. The first step will be to explore the potential of the EE customer base as paying subscribers, but further developments should be expected. With the division focusing on providing OTT-based access to the service for EE customers, and with the willingness to partner and work with OTT players such as Amazon, Netflix, and YouTube, BTwatch wonders if a future deal to put BT Sport on these emerging platforms may not be entirely fanciful.

Premier League finally completes rights auction

BT Sport picked up an additional 20 live matches as England’s Premier League sold the last two batches of football broadcast rights for the 2019-22 seasons. The telco paid £90m for the package, which took its total spending on rights for the period to £975m (£325m per season). While the latest rights appear to come cheap — £1.5m per game over the three-year period, compared to £9.2m per match for the other tranche of games — the nature of the time slot makes them less valuable individually. Details are not entirely clear, but it appears that the rights will break down into two blocks of ten matches that must be played and broadcast over the space of one or two evenings over two separate weeks. BT will also get a job lot of fixtures, and not be able to pick and choose the highest profile matches.

Amazon has also made its first move into UK live sports by acquiring the remaining set of rights, which was targeted at over-the-top (OTT) broadcasters. This bundle includes all the matches played as part of the Boxing Day fixture list, and a round of evening kick-offs in the first week of December. There is not yet any indication of how much Amazon paid for the rights. It is worth noting that the involvement of Amazon could suit BT — the telco has recently added Amazon Prime to its pay-TV portal, and will be able to offer access to content through BT TV. As noted in the Consumer strategy update (see separate report), BT appears to be looking for more opportunities to work with OTT content players, and Amazon’s foray into UK live sports may prove an excellent place to start.

Image: BT

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Contents

EXECUTIVE BRIEF

GROUP

People

Patterson bites the bullet [p6]

  • Du Plessis rips off the plaster
  • History may be kind to the BT’s fallen action hero
  • CEO search – keep an eye on the arrivals board from Bonn?
  • New face, familiar problems
  • A match made in Heaven?

Management update

BT unleashes pension, results and strategy triple bill [p8]

  • Analysts: disappointment and scepticism remained

du Plessis puts case for defence, with Patterson in the dock [p9]

  • A tough taskmaster getting BT in lean and agile shape
  • Lowth and Patterson present business as usual
  • New Chairman, new dynamic
  • Analysts: disappointment and scepticism remained, cont…
  • du Plessis’s money where his mouth is
  • Management remuneration could also embrace a longer term outlook

Strategy

Differentiation, integration, transformation [p12]

  • More management accountability and increased productivity
  • Procurement: why buy when you can strategically source?

BT’s 5G and fibre diet [p13]

  • 5G switched on by 2019
  • Sherman and Watson could be a critical double act for 5G
  • Fixed-line networks also heading for next generation
  • Capex up on network plans

Convergence: start with Consumer, Enterprise to follow [p14]

Global Services accelerating, backed by digital kick-off [p15]

  • Patterson praises Security blanket

Regulatory: bruised egos massaged, truce called [p15]

Pressure points: the hopes and fears on management minds [p16]

  • Table 1 Expectations and risks for BT’s top management
  • BT promotes its sustainability credentials
  • Tech Mahindra brings new R&D to Adastral Park; supports UK-India Tech Partnership
  • BT works with Netcracker on slicing benefits

FY17-18

Digging in ahead of the rebuild [p20]

  • Table 2 BT Group, financial highlights, FY17-18
  • Table 3 BT Group, performance by unit, FY17-18 (adjusted) *
  • Divisions: enterprise challenges underline need for transformation
  • Table 4 BT Group guidance, FY18-19 and beyond

FY18-19 guidance: a long slog ahead [p22]

  • Cash river drying up

Pension

Deficit chokes cash flow as BT calls for oxygen [p23]

  • Table 5 Revised pension contributions 2018-30
  • Lowth bites the bullet, but no short-term solution to the pension problem
  • Trustees keep a say on any ambitious BT activity

Deal speculation bubbles up post-results gloom [p25]

  • Potential for mast sale floated

5G

BT pushes 5G, but in no hurry beyond better broadband [p26]

  • Sutton presents a one step at a time approach to 5G
  • Table 6 BT’s potential path to 5G
  • Options, options…
  • No hurry beyond better mobile broadband
  • Hanif returns with more urgent message
  • Don’t forget Wi-Fi…
  • Table 7 People movement highlights

CONSUMER

  • Allera’s six pillars
  • The A-Team

Strategy update

New Consumer chief, new strategy, familiar buzzwords [p34]

  • Brand identity
  • Network evolution 2018-22
  • When the smoke clears after the fireworks…
  • Table 8 Key new BT and EE launch dates, 2018-19
  • Allera’s approach more aspirational than attritional
  • Potential for BT/EE expansion significant, but unchanged two years in
  • Table 9 Rearranging deckchairs: change in BT/EE place in market 2016 to 2018
  • Barrage of announcements kicks off strategy event

Consumer: all new and improved? [p37]

  • BT TV experiments with YouTube promo

BT family appeal keeping it out of old people’s home [p39]

  • BT in its Prime?

EE promises dynamism with hybrid engine [p40]

  • Hybrid router coming at convergence from 4G side
  • …hybrid prepay tariff to deliver EE new channels

Pay-TV super aggregator to the rescue [p41]

  • BT talking its TV offering down to build it up
  • What’s so super about aggregation?

BT Sport: Modern sport all about the money [p42]

Watson, the game is afoot! [p42]

BT Sport

BT TV enters pay-per-view ring, renews BoxNation deal [p43]

  • EE pipes up on Scottish 4G reach

BT Sport extends production contract with Sunset+Vine [p44]

Premier League finally completes rights auction [p45]

  • Amazon joins the game
  • Report casts doubt on LTE for ESN

ESN

Motorola predicts five more years of Airwave [p47]

Partners

Ericsson joins EE on CX frontline [p48]

  • EE systems exposed by security hacker
  • A mobile deal in a converging world?
  • Ericsson making presence felt in IT

Products and services

BT Plus launch ramps ultrafast drive [p50]

  • Bells and whistles
  • Plus size model wearing emperor’s new clothes?
  • BT Plus a full-fibre spoiler?
  • BT losing its voice?

ENTERPRISE

Products and services

BT launches 4G back-up broadband solution [p53]

Partners

BT turns to Cisco Meraki in the UK [p54]

Public sector contracts

Controversy clings to legacy BT council contracts [p55]

GLOBAL SERVICES

  • Radianz Cloud adds more partners

BT Security

BT trumpets more security collaboration [p57]

Partners

Cisco and BT take another step with SD-WAN [p58]

Riverbed recognises BT DNS relationship [p58]

BT Global Services Sales Kick-Off

  • Table 10 Partners prominent at the Global Services Sales Kick-Off 2018.

Suppliers

Corvil secures Global Services contact contract [p59]

OPENREACH

Fibre First

Openreach to roll out 12,000 FTTP connections in London [p61]

  • City held up as shining example
  • Kent Council to extend Phase 2 BDUK project with BT

Edinburgh to see fibre battles as Openreach gears up [p62]

Network

Analogue switch-off inputs sought by Openreach [p63]

  • Openreach to open fibre training school in Scotland
  • Openreach gets naked
  • All-IP at the core of BT’s hopes
  • Watson five years into a long-term plan
  • CityFibre acquired by Goldman Sachs-backed consortium for £538m
  • TV a success for BT – as a network transformation driver
  • Threads pull through, from 2013 to 2016 to 2018
  • IT running alongside infrastructure

Openreach distances itself from LR-VDSL [p66]

External customers

TalkTalk flags new G.fast trials [p66]

  • It’s official: G.fast offered in consumer pilot

FURTHER READING

INDEX

Index

Symbols

21st Century Fox

– Sky

– – NOW TV 35

– – Sky Box Office 43

– – Sky Sports 35, 41

A

Activ Financial 57

Akamai 59

Alcatel-Lucent 64

AllianceBernstein LP

– Sanford C. Bernstein 10

Alphabet

– Google

– – Android 53

– – Chromecast 39

– – YouTube 39, 42

– Sidewalk Labs

– – Intersection 53

Amazon 34, 35, 39, 40, 41, 42, 45, 49

– Amazon Prime 34, 35, 45

– Amazon Web Services 49

AMC 39

Amdocs 17

Apple 35, 39, 40

Arbor Networks 59

Arqiva 25, 30

Aspect Software 59

Astute Solutions 59

AT&T 17, 20, 38

Aviva 44

B

BAE 30

BAE Systems 30

Berenberg 25

BoxNation 43

Broadband Delivery UK (BDUK) 62

BT Group 7, 8, 9, 11, 13, 16, 20, 21, 22, 23, 25, 26, 28, 30, 31, 34, 39, 44, 54, 55, 57

– BT Consumer 6, 16, 26, 30, 31, 36, 38, 39, 63, 67

– – BT Broadband 41

– – BT Cloud 58

– – BT Infinity 53, 55

– – BT Mobile 50, 51

– – BT TV 30, 34, 35, 39, 41, 43, 45, 65

– – BT Wi-Fi 37, 54

– – Plusnet 34, 36

– BT Enterprise

– – BT Business & Public Sector 21, 54

– – BT Wholesale & Ventures 31

– – InLinkUK 53

– – Liverpool Direct Limited 55

– – Tikit 31

– – TV Connect 31

– BT Global Services 6, 7, 12, 15, 16, 20, 21, 30, 38, 54, 56, 57, 58, 59, 63

– – BT Americas 58

– – BT Connect 58, 59

– – BT Ignite 30

– – BT Italia 9

– – BT Security 15, 54, 57

– – One Connect Limited 55

– BT Pension Fund 23

– BT Technology, Service and Operations 13, 16, 18, 26, 34

– – 21CN 31

– – Adastral Park 18, 29

– – Infinity Lab 55

– – Innovation Martlesham 18

– BT Tower 29, 55

– Directors

– – Ball, Tony 11, 30

– – du Plessis, Jan 6, 8

– – Hoettges, Timotheus 38

– – Rake, Sir Michael 7, 10

– – Richardson, Karen 30

Rose, Nick 11, 30

– EE 6, 9, 17, 21, 25, 31, 34, 35, 36, 37, 38, 39, 40, 41, 42, 44, 47, 48, 49, 50

– – Emergency Services Network 14, 25, 38, 44, 47

– – MBNL 25

– Ex-Directors

– – Bland, Sir Christopher 7

– Executives

– – Allera, Marc 7, 14, 26, 34, 41, 51

– – Brown, Kevin 57

– – Burger, Bas 7, 57

– – Chanmugam, Tony 9

Ginér, Gabrielle 17

– – Harris, Stephen 34

– – Haworth, Andy 34

– – Hindhaugh, Jamie 31

– – Logan, Mark 63

– – Lowth, Simon 6, 8, 9, 14

– – Mears, Kim 62

– – Oliver, Pete 34

– – Patterson, Gavin 6, 8

– – Sabey, Jim 58

– – Selley, Clive 7, 62

– – Sherman, Michael 13

– – Stagg, Matt 31

– – Taylor, Max 34

– – Watson, Howard 13, 18, 42, 64

– Ex-executives

– – Alvarez, Luis 59

– – Bonfield, Sir Peter 7

– – Bronsgeest, Rogier 30

– – Bushell, Delia 30

– – Chanmugam, Tony 9

– – Hanif, Mansoor 29

– – Livingston, Ian 7

– – Petter, John 35, 37

– – Reynolds, Paul 31

– – Verwaayen, Ben 7

– Openreach 6, 7, 9, 13, 14, 16, 21, 22, 24, 25, 30, 38, 42, 51, 61, 62, 63, 64, 65, 66, 67

C

Check Point Software 59

ChildLine 53

Cisco

– Meraki 54, 70

Cisco Systems, Inc. 15, 54, 58, 59, 70

CityFibre 62, 65, 66

CK Hutchison

– Three Group

– – Three UK 25

Cobalt 57

Colt Technology Services 30

Commonwealth Games 30, 31

Computer Sciences Corp 31

Corvil 59

CrowdStrike 59

D

Daisy Group 53

DCMS, UK

– Broadband Delivery UK (BDUK) 62

Deutsche Telekom 7, 17, 24, 25, 38, 48

– T-Mobile 48

Diageo 30

Digital Britain 62

E

eGain 59

Entanet 65

Ericsson 13, 17, 48, 49

European Union 25, 57

F

Facebook 67

Football Association 44

– Football League 44

– Premier League 44, 45, 69

ForeScout 59

Fortinet 59

Fujitsu 17

G

Genesis Technical Systems 67

Genesys 59

Getronics NV 30, 31

Goldman Sachs 65

Google 39, 40, 53

H

Home Office (UK) 47

Honeywell 40

Huawei Technologies 13, 17, 31, 67

I

IMImobile 59

InfoVista 59

IR Prognosis 59

ITV 43

K

KDDI Group 20

Kent County Council 62

KCOM 21, 65

Kollective 59

Korea Telecom 31

L

Lancashire County Council 55

Liberty Global 17

– Virgin Media 21

– – Virgin Mobile 21

LinkedIn 31

Liverpool City Council 55

LogRhythm 59

London Stock Exchange 31

M

M&G Prudential 31, 66

– InfraCapital 31, 66

Microsoft 59

Mobile Broadband Network Ltd (MBNL) 25

Motorola 47

Motorola Solutions

– Airwave 47

N

National Audit Office 47

NEC 20

– Netcracker 20

NetApp, Inc. (Network Appliance) 59

Netflix 34, 39, 41, 42

Nokia 17, 58, 64

– Nuage Networks 58, 59

NTT 20

O

Ofcom 9, 15, 22, 31, 45, 66

– USO 66

Orange 20, 31, 58

Orange Business Services 58

P

Palo Alto 59

Phorm, Inc. (121Media) 31

Polycom 59

Post Office 45

Primesight 53

R

Riverbed Technology 58, 59

S

Samaritans 53

Samsung 17, 39

Scottish Football Association

– Scottish Premier League 44

Skybox Security 59

Sunset + Vine 44

Symantec 54, 59

T

TalkTalk Telecom Group 31, 35, 51, 53, 66, 67

Tech City 55

TechHub 55

Tech Mahindra 18, 20

Telecom Infra Project 67

Telecom Italia SpA 20

Telecom New Zealand 31

Telefónica 31

Telenor 17, 20

Telstra 17, 31, 58

The Number 45

TM Forum 20

Transport for London 31

Twitter 49

U

UBS 10

UEFA 44

– Champions League 44

– Europa League 44

Ultimate Fighting Championship 43

United Nations 17

V

Vela 57

Verizon Communications 17, 31

Vodafone 47, 62, 65

– UK 47, 62, 65

W

Walt Disney Company, The

– ESPN 44

Wandera 59

Westcon 59

WPP

– MEC 28

Y

YouView 25, 31, 39, 41

– Meek, Kip 31

Z

ZTE 17

About

About BTwatch

Report: #296
Published: May 2018
Next report: June 2018
For more information visit: BTwatch