BT Finally Launches Bluephone
By Carlo Longino, Wed Jun 15 21:00:00 EEST 2005

UK carrier BT has launched its "converged" fixed/mobile solution, and while the technology may be converged, the benefits for consumers certainly don't appear to be.


BT announced its plans for a service that would use a fixed line over a Bluetooth connection at home and the mobile network everywhere else about a year ago, with the catchy name "Bluephone". Now, a year on, it's finally released the product under a new name: BT Fusion.

The basic premise remains the same -- users get a standard GSM handset with some special software on it and a Vodafone SIM card, as well as a Bluetooth/Wi-Fi wireless access point for their home. When within range of that AP, the handset connects to it and routes calls over BT's fixed broadband network. When outside the range of the AP, calls travel over Vodafone's mobile network as usual, and the phone can also hand off from the mobile network to the fixed network.

BT is pumping the benefits of the service as improving home mobile reception, and the ability to get "landline rates at home" from a mobile device. The first one is a no-brainer, but check the fine print on those cheap rates: the only calls not charged at the prevailing mobile rate are calls to UK landlines. Sure, better reception at home is great. But users are expected to pay 10 pounds a month -- on top of BT broadband and landline charges -- for very little benefit over their standard landline?

Guy Kewney pretty much decimates the new service over at The Register. An unabashed Skype fanatic, Guy says Fusion doesn't offer any benefits over Skype on a Wi-Fi device. While that's a bit extreme (using Skype on a Wi-Fi-enabled PDA isn't a reasonable expectation for the average consumer, who will much rather carry around a "normal" phone than a PDA or large smartphone), he offers a laundry list of complaints, including: consumers must use the service with BT broadband and Vodafone mobile service; if a user starts a call on the mobile network, then walks into their home and the call is transferred to the Bluetooth access point, the cost for the call doesn't also change.

The service is also currently supported only on one handset, that isn't particlarly flashy, and isn't 3G. But the main problem with Fusion is that beyond improving mobile reception in a home (which probably isn't something a lot of people will be willing to pay for), there is very little benefit for the consumer.

Guy rightly points out this service would have been great three years ago -- but now, with the introduction of fixed replacement VoIP services like Vonage, and free, PC-based services like Skype, consumers' expectations are much, much higher. For the same monthly fee as Fusion, Vonage UK offers unlimited fixed calls, as well as reduced costs on calls to mobiles. The expectation of these "converged" services like Fusion is that they offer converged benefits -- a service that offers users savings on a very narrow range of calls, only when they're at home, doesn't deliver these. Indeed, how is it any different from using a service like Skype that's typically tied to a PC, or a service at home like Vonage? Apart from a single handset, not much. And users have happily kept using their fixed lines in addition to their mobiles when they can save money.

This early effort -- and it should be emphasized that this is early -- doesn't deliver on its promise, even if those promises are mainly implied by users seeking rock-bottom prices. Fusion may prove the underlying technology for a converged service is there, but typically, the business model is fundamentally flawed. UK newspaper The Independent quotes an analyst that points out the cost to a user will be roughly GBP 38 per month right off the bat, including 100 voice minutes. Compare that cost to those of mobile operator 3, or even to those of BT's mobile partner Vodafone.

Where's the savings? That's the question consumers will be asking. Oh, by the way -- while BT "launched" Fusion today, it won't be "widely available for delivery" until September. BT had better significantly improve its offering before then, because the rest of the market isn't standing still.