BT Movio: why only a MVNO and none of the mobile operators have taken up the offer

Last Friday, BT (British Telecom) announced the launch of BT Movio, the world's first wholesale mobile broadcast entertainment service, The BT Movio service will combine live TV (at launch: BBC1; ITV1; Channel 4; and E4), DAB digital radio, a seven-day programme guide and ‘red button’ interactivity for mobile phones.

Interestingly, none of the five UK mobile network operators (O2, Orange, Three/H3G, T-Mobile or Vodafone) decided to partner with BT in the venture. In fact, earlier in the week, Orange issued a statement saying it had "considered the DAB service from BT, but with only one compatible handset currently available and only a small number of channels on offer, [streaming TV over 3G] remains the best means of delivery for Orange". Instead Virgin Mobile, a MVNO - mobile virtual network operator, will offer the service to its subscribers. Like several other MVNOs including Fresh (CarPhoneWarehoue), Virgin Mobile is managed by T-Mobile and runs over its UK network. This is not perhaps surprising.

Subscriber market saturation, static voice call volumes and continued reliance on handset subsidies are all contributing to the pressure on the mobile operators to grow revenues from driving additional network traffic that can be monetised. Providing existing subscribers with access to DAB, Digital Audio Broadcast delivered programming on part of the digital spectrum that is free-to-air and licensed by government, detracts away from the main priority of growing services over their own established 2.5G and 3G networks.

In general, I suspect that mobile operators would want to avoid their handsets being capable of tuning into other (free-to-air) frequencies, a little like FM and AM on an analogue radio set. Operators in their home market, prohibit users from roaming between networks. For Virgin Mobile, itself recently acquired by the UK's leading cable operator ntl:Telewest in a friendly takeover, BT Movio is likely to be integrated into its consolidated quad play offering in the future. For the time being, it's more likely to be viewed by them as a subscriber handset up-sell opportunity.

For BT, its another example of how the company continues to innovate outside of its core telephony business and a reminder of what might have been, had BT not sold its own O2 (formerly Cellnet) mobile business to reduce its debt.

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