EE boasts the largest 4G mobile network and tailored machine-to-machine services for businesses, and BT, without a cellular network. Iis the deal a match made in Internet of Things (IoT) heaven?
For businesses like the RAC – an EE customer – the deal spells a huge boost as it depends on the telco's coverage for its telematics division.
Nick Walker, the motor club’s telematics managing director, says: “We are involved in a continual dialogue with EE about product innovation as the success of telematics depends on EE’s ability to provide the best level of scale and service.
“This deal would put them ahead, which can only be a good thing for the RAC both in terms of our own fleet of 1,500 patrols fitted with telematics, and for our own customers using RACTelematics.”
The RAC partnered with Volkswagen's truck division to offer fleet managers real-time driver tracking, it announced this week.
EE has several other high-profile customers, including Wembley Stadium, the London Air Ambulance and estate agent firm Foxtons, who are no doubt cheering the £12.5 billion deal.
Why did BT pay £12.5 billion for another telco?
Buying EE was a necessity for BT, a firm interested in the IoT but limited in its capabilities without a mobile network to its name.
Conversely, EE is now liberated from a tricky ownership structure that was stifling its IoT innovation, despite its market lead on 4G. Rivals Orange and Deutsche Telekom’s focus on its own telematics, data and connectivity services meant EE’s maturity in the IoT market was stunted. Now BT can help it flourish with its R&D, business network and cash.
‘Making the IoT market more competitive’
Further, the landmark deal could change the entire landscape of the connected services market in the UK, one analyst says - but businesses waiting for the innovation to trickle down into their own services shouldn't hold their breath.
“The deal is going to make the IoT market more competitive...however, it could be two or three years before business customers start to see the benefit of this,” Aapo Markkanen, principal analyst at ABI research says.
He adds: “BT’s motivation was driven by its core consumer business so it can attract mobile subscribers, fixed line telephony and pay-TV. The IoT and machine-to-machine (M2M) technology is a side story…but I am curious to see how it plays out.”
One pureplay IoT vendor, ThingWorx (a PTC company) believes the deal spells “very interesting times indeed.”
Thomas Svensson, ThingWorx’s European general manager says: “We believe that we will soon begin to see all telcos developing new offerings to differentiate themselves in the marketplace. In the UK, we are seeing rapid growth of our direct channel and partner ecosystem, which reflects the immediate opportunity for IoT solutions providers.
“Because of its enormous potential, there will be heavy investments in IoT across the board.”
This, he adds, will affect the enterprise market significantly due to competition, pricing and product development.
“BT is now even better positioned to capitalise on the emerging opportunity in its home market. The synergy potential alone (£4bn+) will allow BT to invest in new products and services and the acquisition will accelerate BT’s domestic opportunities in IoT and mobility in general.”
EE to gain from BT's partnerships with smart cities and the Hypercat IoT standard
BT has its own M2M products and services, connecting remote devices for customers like Bank Machine, a leading ATM operator, as well as UK bookmakers and financial companies.
Additionally, its involvement in the government-funded Hypercat standard, which will be pivotal when the UK-wide IoT comes to be, could be a useful tool for EE.
Hypercat is a standard for devices to communicate data in the same way regardless of its manufacturer. The government has poured over £6 million into the project so far and it is gathering momentum as tech firms sign up to support it.
BT's work with Milton Keynes to produce the UK’s first truly smart city may be a beneficial partnership for EE. Milton Keynes will host one of the first driverless car trials this year as well as a energy and water efficiency hub amongst other innovations, and this could spell big opportunities for progression in the big data, telematics and urban planning if combined with EE's 4G (and 5G in the future).
While EE has struggled to compete with Telefonica-owned O2 and Vodafone’s IoT or M2M products in the past, a wider geographic spread and increased investment from its new parent, EE could become a genuine contender in the market – bringing its customers and partners along with it.