Vodafone joins battle in 'multiplay' market

Vodafone will make its first move into the "multiplay" market of bundled telecoms and internet services with plans to match BT's fibre broadband coverage of the UK.

The telecoms group will reveal plans in coming weeks for a push into the UK consumer broadband market as rivals such as Skyand BTadd mobile to their fixed line services.

In response, Vodafone will launch home broadband this spring before adding a cloud-based TV service later in the year.

The company will then begin selling "simplified" bundled mobile, internet and TV services, according to one person with knowledge of the plans.

Vodafone will use network technology being deployed by BT's Openreach division to reach a much higher population at higher speeds than the traditional local exchanges.

It is planning to connect its existing fibre broadband network to about 1,000 of BT's larger exchanges in order to reach more than four-fifths of the country by the summer. The group has already started technical trials.

The company will use cloud-based technology to provide TV content via the internet usinga simple TV set top box with a bundled pricing plan for mobile customers.

Vodafone is expected to provide more details of its European fixed broadband and TV services when it publishes third-quarter results on Thursday.

The company has to date focused on mobile operations in the UK, although it has launched internet and TV in other European countries such as Italy and Germany.

Vodafone has a major advantage over other internet providers such as Sky and TalkTalk that rely more on BT's broadband infrastructure because it acquired a large national fibre network with the purchase of Cable & Wireless Worldwide in 2011.

Vodafone has used the network for business customers but has not yet sought to challenge the dominance of BT and Sky in the home broadband market.

However, every major internet provider will be able to sell a combination of mobile and fixed telecoms, TV and internet from 2016, with BT expected to close the purchase of EE that will give it considerable scale across the markets.

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Some telecoms executives - such as Three's chief David Dyson - suggest that there is not yet the appetite for multi-product bundles in the UK, although third-quarter results from TalkTalk on Tuesday showed an initially strong take-up of its recently launched quad play services.

However, TalkTalk also warned that cost savings would be £10m-15m lower than planned - sending full year cash earnings towards the lower end of expectations - as it has sought to bolster this offer with acquisitions and marketing.

In a survey on Tuesday, CCS Insight said that UK consumers were ready to embrace multiplay services. It found that appetite grew as people own more devices. Most users who have signed up to a multiplay package own more than three connected devices.

"There is clear consumer appetite for multiplay services: more than four in 10 people who do not have a multiplay bundle would consider signing up to one," the report said.

"Providers that already have a relationship with subscribers for two or more services are in prime position to up-sell."

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