Fixed-mobile convergence for BT and Vodafone
BT today made not one but two hugely important announcements in fixed-mobile convergence.
Firstly it announced a partnership with Alcatel, Ericsson, and Motorola to accelerate the development of its convergent handset, project Bluephone, which will launch by the end of 2004. BT also announced that Vodafone is to be its new mobile partner to support this development.
This is huge news for BT's future revenues, its partners and customers.
BT full-year revenues (to be announced on Thursday this week) are expected to show a decline year on year. Growth in similar incumbent operators is all coming from mobile, but of course BT no longer has a mobile arm. With fixed and mobile services merging, BT had to do something and quickly.
The deal with Alcatel, Ericsson and Motorola is interesting because BT is pulling together the expertise of these companies to build the solution required. Alcatel and Ericsson are leaders in both fixed and mobile solutions (and heavily involved in the development of BT's 21st century network project), and Motorola brings a lifetime of mobile experience.
As a consequence, BT's fixed network will become more convergent with mobile requirements. Successfully pulling this off will be a coup for all parties. But it's the deal with Vodafone that will take all the headlines, and with good reason. This deal is much more than a simple MVNO deal of the type BT already has with O2 for business and T-Mobile for consumers. In effect, BT has cemented its position as the predominant fixed carrier of mobile calls.
As for Vodafone, the deal commits BT into providing an efficient transport network, and also offers leverage from BT's predominant position in the UK fixed market. Once again, both parties seem to be winners here.
But what about customers? Well, it looks like they will be happy too. Business customers desperately want their myriad of different devices to talk to each other in a more seamless way. These announcements offer hope that this vision is within touching distance rather than a distant hope. For residential customers it means mobile phones become smart and select the
most cost efficient platform to connect to. This is good news for both business and residential customers.
There are few details available yet. Many things will need to be worked out. In particular, the critical issue (in calling-party-pays markets) of who pays to deliver a converged call on a mobile network? Analysts like Ovum have been talking about fixed-mobile convergence for some time.
Now it's coming, nothing will ever be the same again.
Eden Zoller and Mike Cansfield are analysts for Ovum.com
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