O2 Home Broadband was a fixed-line internet service offered by the mobile phone company O2, then a subsidiary of the Spanish telecoms group Telefonica. It launched in October 2007 and was built on top of the LLU (local loop unbundling; a process where a provider installs its own equipment inside BT's telephone exchanges rather than renting capacity from BT Wholesale) network of Be Broadband, which O2 had acquired for £50 million the year before. The service ran for six years before Telefonica, looking to concentrate its resources on rolling out 4G mobile, sold the broadband business to Sky for £200 million.
How O2 came to offer home broadband
O2 was originally a mobile-only company. Its roots stretch back to 1985, when BT and Securicor launched Cellnet, one of the UK's first two mobile networks. BT later bought out its partner, renamed the service BT Cellnet, and eventually spun it off in 2002 as mmO2, which quickly became O2. In 2006, Spanish telecoms giant Telefonica bought O2 plc for £18 billion, making it part of one of the world's largest telecoms groups.
To enter the home broadband market, O2 bought Be Un Limited in June 2006 for £50 million. Be had been founded independently in 2005 and had built one of the UK's first and most extensive ADSL2+ (a faster variant of the standard broadband technology that ran down copper phone lines, capable of delivering speeds up to 24Mbps) LLU networks, covering over 1,000 exchanges. Rather than folding Be into the O2 brand immediately, Telefonica ran the two services in parallel: Be continued as a separate, more technically sophisticated product aimed at enthusiast users, while O2 launched its own consumer-facing broadband service on 15 October 2007, using the same underlying Be network.
O2 broadband packages and pricing
O2 Home Broadband ran over an LLU network, which meant it offered ADSL2+ speeds up to 16Mbps downstream (the speed at which data arrives on your device) where the infrastructure was in place. The service was marketed strongly to existing O2 mobile customers, with discounts offered for customers who bundled home broadband with their mobile contract. This cross-selling approach gave O2 a ready-made audience and a clear point of difference from pure broadband providers such as BT and TalkTalk.
Pricing was competitive. Entry-level unlimited packages were available at prices broadly in line with rivals, and O2 promoted the convenience of managing mobile and broadband on a single bill. In June 2011, O2 announced a fibre broadband service using FTTC (Fibre to the Cabinet; a connection where fibre optic cable runs to a green street cabinet, with the remaining distance to the home covered by the existing copper phone line) technology, designed to compete with BT Infinity. This gave O2 customers access to speeds up to 38Mbps on the faster tier. The service received generally positive reviews; customers highlighted the competitive pricing and the benefit of dealing with a single provider for mobile and home internet. The Be network's technical quality underpinned O2's product, giving it better-than-average reliability compared with some rivals that depended entirely on BT Wholesale.
The sale to Sky and what happened to customers
In early 2013, Telefonica decided to exit the UK fixed-line market entirely. The Spanish company had accumulated significant costs rolling out 4G mobile across Europe and concluded that maintaining a separate home broadband operation was not central to its strategy. On 1 March 2013 it announced the sale of the O2 and Be consumer broadband and home phone businesses to Sky (BSkyB at the time) for an initial £180 million, with up to £20 million more payable after customer migration was complete.
At the time of the sale, around 500,000 customers held contracts across the O2 and Be brands. All were transferred to Sky following Office of Fair Trading approval in May 2013. Sky migrated these customers onto its own LLU network where available and onto Openreach (BT's network infrastructure arm, which provides the physical connections to most UK homes) where its own kit was not installed. The migration was completed in 2014. Sky paid close to £400 per customer acquired, reflecting the relatively high quality of the base.
For many customers the transition was smooth; Sky offered a broadly comparable service and existing contract terms were honoured. Some Be customers, who had chosen that brand precisely because of its technical flexibility and features such as static IP addresses and configurable line profiles, expressed dissatisfaction at losing those options. Sky eventually launched a product called Sky Broadband Unlimited Pro to accommodate some of those requirements.
In summary
O2 Home Broadband had a clean and competent six-year run. It was never a market leader by volume, but it built a loyal customer base through competitive pricing, a strong mobile cross-sell and a technically sound network inherited from Be. Its exit from the market was driven entirely by Telefonica's corporate strategy rather than any failure of the service itself. The broadband business it sold to Sky gave Sky the scale to become the UK's second-largest broadband provider, overtaking Virgin Media at the time.
Key dates in O2 Home Broadband’s history
Be Un Limited founded; first ADSL2+ LLU network in the UK
Boris Ivanovic and Dana Tobak found Be Un Limited as an independent ISP targeting technically aware customers. Be builds one of the UK's first ADSL2+ LLU networks, offering speeds up to 24Mbps at a time when most competitors top out at 8Mbps. The service earns a strong reputation for reliability and customer support.
Telefonica acquires O2 plc for £18 billion
Spanish telecoms group Telefonica completes its purchase of O2 plc, one of the UK's largest mobile networks. The O2 brand and UK headquarters are retained. The acquisition gives Telefonica a large base of UK mobile customers and, shortly afterwards, an appetite for the home broadband market.
O2 buys Be Un Limited for £50 million
O2 acquires Be Un Limited, gaining its LLU network and customer base. The Be brand is kept as a separate, technically focused product. The acquisition gives O2 the infrastructure it needs to launch a consumer home broadband service under its own name.
O2 Home Broadband launches
O2 launches its consumer broadband service in the UK, running over the Be LLU network. The service targets existing O2 mobile customers with bundle discounts and the convenience of a single bill. Packages offer speeds up to 16Mbps over ADSL2+ where the Be network has unbundled the local exchange.
O2 announces FTTC fibre broadband service
O2 launches a fibre broadband service using FTTC technology, competing with BT Infinity. The faster tier offers speeds up to 38Mbps, later expanded. The service adds a genuine speed advantage for customers in areas covered by the fibre rollout, and draws favourable comparisons with the market leader on pricing.
Telefonica announces sale of O2 and Be broadband to Sky for up to £200 million
Sky agrees to buy the consumer broadband and home phone businesses of both O2 and Be from Telefonica for £180 million upfront, with up to £20 million more on completion of customer migration. Telefonica says the deal lets it focus on 4G mobile. The combined business holds around 500,000 customers at the time of the announcement.
Office of Fair Trading approves the sale; migration to Sky begins
The UK competition regulator clears the acquisition. Sky begins migrating O2 and Be customers onto its own LLU network and Openreach infrastructure. The process is completed in 2014. Sky becomes the UK's second-largest broadband provider as a result of the deal, surpassing Virgin Media in customer numbers at the time.
O2 and Be brands retired; all customers on Sky Broadband
The migration from O2 and Be onto Sky's systems is complete. Both brands cease to exist as independent services. Sky launches Sky Broadband Unlimited Pro to retain some of the technically demanding Be customers who had valued features such as static IP addresses and configurable line profiles.