Virgin Media and O2 have received the all-clear from UK regulators to proceed with a proposed £ 31bn merger. Given that these competing companies are now set to become a single giant in broadband, television, and cell phones, what does that mean for existing customers? And when can we expect some changes?
Martin Coleman, chief investigator for the Competition and Markets Authority (CMA), announced his decision to go ahead with the merger, saying, “O2 and Virgin are key service providers to other companies serving millions of consumers. It was important to make sure that this merger did not make these people worse off. That is why we carried out an in-depth investigation. After carefully examining the deal, we have confidence that competition between wireless operators will continue to be fierce and therefore it is unlikely that the combination will result in higher prices or lower quality services. “
First of all, the green light for the merger means good news for all Virgin Media customers who are patiently waiting to be upgraded to the next generation of gigabit fiber optic broadband. That’s because Lutz Schuler, who currently heads Virgin Media in the UK but will become Chief Executive Officer (CEO) of the combined company Virgin Media-O2, has committed to bringing an additional million households to this gigabit-enabled broadband within 12 years to be added months after the completion of the merger ”.
Virgin Media had already promised to reach a target of 15 million households by the end of this year. After the regulatory authorities have issued the seal of approval, the additional obligation will increase the amount to 16 million by the end of 2021. That’s really impressive.
For comparison: Openreach from BT, which provides broadband connections to BT, EE, Sky, TalkTalk, Plusnet and other providers, has connected around 4.5 million locations with its gigabit-enabled fiber optic broadband. And Virgin Media-O2 does not plan to reduce its lead over the competition anytime soon.
The newly merged company previously spoke of a “goal to accelerate investments” and “in the coming years” to connect seven million more households to Gigabit-enabled broadband. It’s unclear exactly where these homes would be, but it could be that smaller towns and villages see these future-proof connections come online. With millions choosing to work from home permanently, these upgrades could make a number of rural cities viable for those looking to leave cities behind.
And when landline broadband isn’t available, Virgin Media-O2 wants to keep you connected to 5G too. Yes, this £ 31 billion deal isn’t just about fiber broadband, it’s also about getting both companies to compete against BT and EE at next-generation mobile data speeds.
Super-fast 5G networks are widely expected to become essential for many customers in the coming years thanks to fast downloads and low latency, which many believe will accelerate remote working, augmented reality (AR) applications and self-driving cars . Currently, Virgin Media has signed a deal with Vodafone to use the 5G network so its customers don’t miss a thing.
However, with the upcoming O2 merger, Virgin Media will finally have its own 5G infrastructure across the UK. Virgin Media owner Liberty Global may invest at its own discretion. It could also leverage the 5G network to power home WiFi connections for those who are not currently connected to the fiber optic broadband infrastructure. So you could have a 5G hub that provides WiFi to your devices before digging the street and connecting your street with the gigabit-enabled cables. EE currently offers a similar solution for customers who cannot use the Openreach broadband network.
In other words, with the merger now moving forward, Virgin Media customers should expect more options to go online around 5G. And O2 customers should see greater integration with the services already offered by Virgin Media, including superfast broadband for the home, public WiFi hotspots on the London Underground and elsewhere, and the TV 360 TELEVISION set-top box competing with Sky .
Virgin Media now has a real incentive to entice its broadband or television customers to break away from competing wireless contracts. Therefore, we should expect exclusive offers to entice EE, Three or Sky customers to move their SIM-only tariff or monthly phone contract internally with Virgin Media – like their home broadband. This could be a great way for customers with phone, television, and broadband contracts with three different companies to save some money – and make their monthly statements a little easier to read.
As mentioned above, it is possible for the two companies to leverage each other’s strengths to compete with the competition. For example, O2 can stream content from your Virgin Media TV V6 box while on the move without counting towards your monthly mobile data allowance, for example. This would be a clever way to entice those who are already paying for the TV to move their cellular plan internally.
We have already seen that competitors use this type of incentive. BT’s own mobile network EE currently offers a three-month free subscription to BT Sport. If you look at the EE network, you will not be billed for any of the data used to stream matches). There is also a “Smart Benefit” for some customers with monthly payments and only for SIM cards, which bundles a free BT Sport subscription for the duration of your contract.
Aside from the potential freebies and perks for existing Virgin Media and O2 customers, this could also be a great career change opportunity. That’s because parent companies Liberty Global and Telefonica are committed to creating 4,000 jobs and 1,000 apprenticeships if they get regulatory approval from the CMA.
