BSkyB to buy The Cloud
BSkyB is set to buy the UK public WiFi network The Cloud, according to reports in The Sunday Times.
An announcement is expected this week, as the pay-TV company reports its latest earnings.
If the deal goes ahead, Sky will be able to offer its 2.8 million fixed-line broadband customers out-of-home internet access via The Cloud network – rivalling BT’s similar Openzone service.
The Cloud currently has a network of 22,000 European hot-spots, which includes cafes, bars and restaurants around the UK. It provides free WiFi services in all of the UK’s 1300 McDonald’s and Pret-a-Manger outlets.
The increasing popularity of smartphones and tablets has led to a higher demand for out-of-home WiFi access – which puts Sky in a good position. It will make its broadband / TV subscription package more attractive to existing and new customers, and will also allow it to improve its content strategy (particularly its mobile TV offering). “Sky already offers its subscribers sport and news content on their mobiles but this deal promises to improve the service,” The Sunday Times said.
It could also pave the way for Sky to launch a full mobile service. If the Rupert Murdoch-owned company easily combines mobile broadband with existing subscriptions, perhaps gaining increased revenues from tiered pricing packages, it could potentially offer a mobile plan too.
WiFi as a technology is cheap and robust, and provides a better user experience than relying on mobile 3G or waiting for 4G. However, mobile operators have yet to offer mobile WiFi access because they cannot charge for data usage over WiFi in the same way they can over 3G.
The opportunity for Sky is to monetise data via its existing subscription packages, bundling mobile services alongside fixed-broadband and TV services – and in turn, undercut existing mobile operators. Sky already has a 14% share of the UK broadband market, which gives it a captive audience for The Cloud.
Even without fully launching in to the mobile space, Sky’s latest acquisition will worry mobile operators – if Sky customers can access The Cloud network easily and efficiently, they will be less willing to pay operators such as Vodafone for 3G data, undermining existing mobile contracts.
Either way, it presents new opportunities for Sky, at the very least to improve its existing content and broadband offering, though mobile operators will be closely monitoring Sky’s move in to this space – for them, it is not such good news.