BT plans Fusion boosts for 2006

IDG News Service - British Telecommunications PLC plans to sell 20 different converged Wi-Fi and cellular phone models next year as part of its BT Fusion service, an executive said on Wednesday during the Smartphone Show in London. BT also has other plans to expand the service and has a keen eye on the competition.

The converged Wi-Fi and Global System for Mobile Communications (GSM) phones, many of which will support 3G, will come from manufacturers including Nokia Corp., LG Electronics Inc., Motorola Inc. and HTC Corp., said Dave Woodbridge, general manager of mobile devices for BT. "We're spending huge amounts of time working with the manufacturers," he said.

BT launched Fusion with much fanfare earlier this year. Customers use a single handset to make cellular calls over the wide-area network and low-cost voice-over-IP (VoIP) calls in their homes via a Bluetooth connection to BT's broadband service.

When Fusion launched, it was criticized for using Bluetooth rather than Wi-Fi. BT said then that the converged Wi-Fi and GSM handsets of the time were still too expensive for the mass market.

BT is planning to launch a business version of Fusion, Woodbridge said. The plan is in line with those of other handset manufacturers and vendors that are also promoting the use of single handsets that enable voice over Wi-Fi in the office and cellular elsewhere.

Woodbridge initially suggested that BT has an advantage over operators such as the U.K. network of Vodafone Group PLC, which doesn't own a land-line network and thus can't offer a similar service as efficiently. End users might prefer a service like Fusion that allows them to browse the Web over Wi-Fi in the home at a faster rate and lower cost than browsing over a 3G cellular service, he said.

However, the trend toward bundled cellular price plans is a threat to Fusion: "Bundled minutes on GSM are a concern for us," he said. That's because the cost of browsing becomes less of an issue when customers subscribe to monthly cellular packages that include large volumes of voice and data for a set price.

Vodafone ultimately does benefit from the Fusion service because BT doesn't own a cellular network and resells service to customers from the Vodafone network.

The Fusion service may also be threatened by free VoIP services like Skype, which customers could use in the home instead of Fusion. Calls on Fusion in the home cost £0.03 (5 cents) a minute during the day and £0.055 an hour in the evening and on weekends. BT will competewith services like Skype on quality of service because it's unlikely that BT could legally block access to such free services, Woodbridge said.