Orange to offer landlines to businesses

The fixed line voice market may be declining, but Orange has picked a juicy segment to target

Orange announced on Friday that it's getting into the fixed-line game.

Its landline offering will be aimed at small businesses and will give customers one bill and one point of contact for customer service queries.

Orange's Landline for Business will offered to businesses of up to 250 people although sole traders and partnerships will be excluded. Once regulatory changes come into effect later this year, Orange expects that threshold will be upped to include businesses of up to 500 but won't be made available to large companies.

Orange will be taking on a declining market; revenues in fixed line telecoms are dropping by an average of 1.6 percent per year, according to the EC. Research from market research company Infocom has shown the UK witnessed one of the strongest decreases of landline voice minutes in Europe over 2004 and 2005 – a drop of nearly 6 percent.

Nevertheless, analysts believe that the move could pay off for the mobile operator. Jeremy Green, principal analyst at Ovum, said Orange had taken the clever step of focusing on a market likely to be hanging onto their landlines for some time.

He said the move was "smart and sensible" and will appeal to those looking for a one-stop shop rather than those trying to save a penny off calls here and there. "I don't think it's about revenues," he told ZDNet UK sister site "It's about locking in customers — the more things you sell them, the less likely they are to churn."

Orange, which will be using BT's network, claims it will be offering cheaper prices than the telco. However, according to Jason Ellis, Orange's head of convergence, one point of contact will be the main selling point for the operator. "There will always be people cheaper than Orange," he said, "but we think the price point will come up to switching levels."

Green said he expected other mobile operators to follow Orange's move into the fixed line world, with O2 and T-Mobile the most likely suspects — both operators having already launched joint fixed and mobile offerings for consumers in Germany. Orange is also considering a consumer product in the future.

Orange's Ellis said he expected further diversification from the operator, with the fixed-mobile offering potentially being expanded to cover other technologies. He said: "As we progress you'll start to see the addition of broadband and VoIP. By the end of 2006, we will look like one Orange."