BT-Vodafone alliance to combine fixed lines with mobiles

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The Independent Online

BT Group yesterday unveiled details of its new BluePhone initiative, a telecoms service that combines mobile and fixed-line operations in one product.

BT Group yesterday unveiled details of its new BluePhone initiative, a telecoms service that combines mobile and fixed-line operations in one product.

The company announced that it had signed up with Vodafone as its mobile partner in the project and that Vodafone would supply BT's mobile services for all its internal and external requirements through a mobile virtual network operator (MVNO) arrangement.

BluePhone, a working name at the moment, will be launched this summer with 1,000 customers, with a nationwide launch later in the year. It will start with a Motorola handset that will act as a normal mobile when customers are out and about but revert to using BT's much cheaper fixed-line network at home or at work.

BT said it was in talks with 10 handset manufacturers to eventually supply phones for its service, in order to offer consumers choice. BT believes BluePhone will be 30 per cent cheaper than using a mobile phone in the home or at work.

Pierre Danon, the chief executive of BT Retail, said: "We think this has the potential to at least ignite a revolution. It will not be the last move as competitors will enter the market but it is a major step in integrating fixed and mobile services."

BluePhone will be Europe's first fully converged fixed-mobile communication service. It uses Bluetooth radio technology to transfer mobile calls on to a fixed-line network without the need for cables.

As well as the Vodafone partnership, a seven-company consortium was announced yesterday to provide BT with the technical expertise to launch the service. The group includes Alcatel, Ericsson and Motorola.

Although Vodafone could lose some of its mobile subscribers to a service such as BluePhone, it has chosen to enter the market early to try to grab market share, ahead of rivals such as mmO 2 and Orange.

Mr Danon said: "If you accept it's going to happen because it is good for the consumer then if you are Vodafone you would prefer to lead it and gain market share against your rivals."

Bill Morrow, Vodafone's UK chief executive, said: "As the mobile partner in BT's convergence strategy, this enables Vodafone to maximise its network and service assets while generating additional revenue from a new source."

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