BT launches "watershed" fixed and mobile handset

But analysts warn the complex issue of pricing will be key as to whether the product is a success with consumers

BT unveiled its fixed and mobile convergence service on Wednesday, renaming it BT Fusion and offering it under two different pricing packages.

Fusion, previously known as Project Bluephone, is aimed initially at the consumer market and is based around a cordless Motorola handset that acts as a normal cellular phone outside of the home, but inside routes calls through a hub onto a BT broadband line.

"The launch of BT Fusion will start with approximately 400 early adopter customers, with the service being widely available for delivery in September. BT is taking a world lead in pushing forward fixed-mobile convergence and BT Fusion will form a significant part of our growth plans,” said Ian Livingston, chief executive of BT Retail.

The Fusion handset currently uses Bluetooth to connect to the hub but system is also Wi-Fi enabled so customers can also connect wireless-enabled PCs, laptops, games consoles and printers to broadband to create a home network. Consumers will also be able to use the hub with Wi-Fi cellular phones as they become available.

Fusion will come in the form of two pricing bundles. The Fusion 100 will provide customers with 100 free call minutes for £9.99 per month, while Fusion 200 will cost £14.99 per month for 200 free call minutes. Users will also receive handsets and the Hub as part of the package.

Analysts responded to the launch of Fusion by claiming that the move marks a watershed moment for the telecoms industry. "The separate Fixed and Mobile telephony services are no longer discreet but are intertwined. It is not overstating the case to say that the industry will never be the same again," claimed analyst house Ovum in a research note released today.

But despite the huge implication of the deal, getting the pricing right will make or break Fusion according to Ovum. “BT is offering mobile to landline calls at the same price as its current landline rates – savings of up to 95 per cent. This makes a great headline, but is just one type of call,”

Fusion 100’s £9.99 fee, on the other hand, compares “less well” with the bucket offerings of mobile operators such as 3, the analyst warned.

Fusion’s success will also rest on BT getting its distribution strategy right. “Most customers choose their service provider in the high street at retail outlets such as Carphone Warehouse. Initially, BT plans to only offer Fusion through its portal and by order over the phone,” said Ovum.

While this may seem counter-intuitive, it does make sense as Fusion only works with a BT broadband line and the telco knows who all of its 1.3 million customers are. “It will be interesting to see if BT needs to move into the High Street for volume sales or whether it finds it does not need to go down this traditional path,” said Ovum.

For more on Fusion/Bluephone see the feature here: