Sky dives into mobile market with "flexible" contracts but steers clear of content offers

 
Billy Bambrough
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Sky has been planning its mobile service for over two years
Sky has been planning its mobile service for over two years (Source: Getty)

Pay-TV operator Sky has unveiled details of its long-awaited mobile service.

Available to Sky staff already and rolling out gradually to pre-registered customers and then to the wider market early next year, the service is aiming to offer what the company has called a "flexible" mobile subscription plan.

Sky will then begin offering handsets to users from spring next year and Sky will launch its first major marketing push then. It claims to have some 46,000 people pre-registered for the service.

Sky has been secretive about its pricing since its plans were announced last year. It is offering a full package of 5GB of data with unlimited calls and text for £30.

The service comes with three data plans:

  • 1GB for £10 per month
  • 3GB for £15 per month
  • 5GB for £20 per month

Non-Sky TV customers can add on unlimited calls and texts for £10 per month, or pay for calls and texts on a pay-as-you-use basis. The contract will tie users in for a 12 month period.

Read more: Sky plots Spain launch as online TV war escalates

In what some analysts are calling Sky's hook, it will also let roll over unused data at the end of each month to a maximum of three years, potentially allowing users to hoard data for months when they expect to use more.

Dan Howdle, director of communications at comparison website Cable, said:

Sky’s ‘hook’ is allowing customers to ‘piggybank’ data that went unused at the end of each month and store it for up to three years.

No mobile provider has ever offered this before. It shows a keen understanding of how customers consume their data – some months they use a lot, others they use very little.

Sky has opted to steer clear of using its extensive movie and sports content to try and entice users, but will allow them to sync programming from Sky+ set top boxes.

Sky TV customers will get Sky Go Extra for free when they sign up for Sky Mobile – usually £5 a month for its TV customers.

Some analysts expressed their disappointment that Sky would not be using its content to attract customers.

Paolo Pescatore, Director of Multiplay and Media, CCS Insight

Overall, we are somewhat underwhelmed with Sky’s mobile offer. We feel that Sky has missed a trick by not placing greater focus on its biggest asset, content.

Mobile network operators will breathe a sigh of relief given that Sky has decided not to go down the route of giving mobile away.

Sky argues it has designed the service around what customers said they wanted and claims to have spoken to 32,000 prospective customers ahead of making any decisions.

Stephen van Rooyen, UK and Ireland Sky chief executive, said:

We felt it was time to shake up the mobile market and give customers a completely new way to manage their mobile plan.

We've designed it based on what people told us they want - it's easy, flexible and transparent and it puts the customer in control.

The service is running on top of O2's mobile network, as what the industry calls a mobile virtual network operator (MVNO).

Speaking ahead of the announcement Rooyen said it company had not ruled out bidding for its own mobile spectrum, meaning it could operate independently of a network provider.

The communications watchdog Ofcom is holding an auction for the next batch of mobile network spectrum in 2017 and some telecom company's have called for a limit to the amount that industry giant BT-EE can control.

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Ofcom has already said BT-EE will not be allowed to bid for additional capacity.

Sky's SIM card-only set up is comparable to MVNO operator giffgaff, both of which run on the O2 network and allow customers to dial their plans up or down depending on their usage.

The service – which has been in development for just over two years – is going to be rolled out to pre-registered users in mid-December and to everyone else in January.

One of the major industry expectations ahead of the launch was whether Sky would use mobile to complete its so called quadplay offering – where telecoms try and provide households with a landline, internet, TV, and mobile – however Lyssa McGowan, Sky's director of communications products, played this down ahead of the announcement.

"There's been a lot of talk about quadplay around the world, but not a lot of action," she said.

Existing Sky customers will receive a separate bill for mobile.

Read more: Does the BT - EE deal pave the way for better services?

Ewan Taylor-Gibson, telecoms expert at uSwitch.com, said:

Sky’s first mobile offering is very competitive, as long as you’re already a Sky TV customer. By putting data first, with minutes and texts as an add on, Sky is catering to our ever-increasing appetite for megabytes.

But if the TV giant really wants to appeal to data hungry consumers it may have to offer bigger data bundles. However, early interest from 46,000 customers is certainly a head-start out of the blocks.

Sky's move into mobile has been eagerly awaited by industry watchers hoping it could revitalise competition in the sector.

Sky have said that it will disclose next year how many subscribers it has accrued in its first year.

Patrick Wellington, a Morgan Stanley telecom's analyst is upbeat about the offering, thanks to Sky's infrastructure, but warns that Sky doesn't need to get involved in handsets.

Sky said at its capital markets day that mobile capital expenditure is planned at £35m in 2016 and 2017. Sky has said that the profit and loss cost of the mobile launch is already reflected in consensus EBITA figures in full year 2017, we have a £49m loss followed by a small EBITA contribution in full year 18.

The first smartphone models to go on sale will be flagship Samsung handsets and iPhones, with “other manufacturers to be announced closer to the time”.

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