News Analysis: BT Bets on Mobile Convergence

Article excerpt

The telecoms giant is banking on its integrated phone service proving a hit with customers. Jane Simms reports

BT's decision to join forces with Vodafone to offer fully converged fixed and mobile services raised a few eyebrows last month (Marketing, May 19).

To many observers, the two erstwhile competitors make uneasy bedfellows.

Others point out that BT's efforts to re-enter the mobile market since it demerged Cellnet (now mmO2) two years ago have met with mixed success. BT Mobile has only 250,000 customers, and fewer than 50,000 consumers have signed up to the BT Mobile Home plan launched less than six months ago.

Defying the critics, Pierre Danon, chief executive of BT Retail, hailed the venture as a revolutionary step toward integrating fixed and mobile services. 'This puts us in an ideal position to work together on convergence and offer customers the appealing package of trust and innovation,' he says.

The focus of the tie-up is a service entitled Bluephone. This consists of a standard mobile handset containing Bluetooth technology that can switch calls automatically from Vodafone's mobile network to a BT landline depending on where the phone is being used. This means customers can access the same information and services whether they are at home, in the office or on the move. Other benefits claimed by BT include a single bill, better reception, faster data rates and lower overall charges, and there are plans for extra convergence devices such as a laptop.

Gradual roll-out

Bluephone will soft-launch over the summer to 1000 users, with a wider roll-out scheduled for before the end of the year. BT is banking on its success.

It hopes the deal will generate an additional pounds 1bn in revenues within the next five years.

But how will the service affect BT's image? Nomura analyst Chris Alliott says the promise of converged technology from BT might only have a 'slightly positive' effect on consumers' perceptions of the brand. 'Consumers are only interested in good products that work well at good prices,' he says.

'There is a way to go before the technology is proven in their eyes.'

Critically for both BT and Vodafone, there are big question marks over the ability of the technology to deliver the promised benefits. 'It is difficult to get handover between different radio technologies, companies and billing systems,' argues Julian Hewett, chief analyst at Ovum. He points out that callers to a Bluephone will not know whether the recipient is on the low-cost fixed line or mobile network, so won't know how much the call is costing them. …