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BT takes on cellcos in converged services for SMEs

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The cellular operators have been chasing the small and medium enterprise (SME) market aggressively in the past year, but in the UK they look to have been trumped by the wireline carrier, BT.

The incumbent recently announced its Business Plan with Mobile for smaller businesses with an annual communications spend of £5,000 or more, providing discounts and the all-important single bill for fixed and mobile services.

BT’s move will be closely watched by its counterparts round Europe, and is itself a direct response to an earlier SME launch by Orange. This points to a heating up of the UK fixed-mobile sector, to approach the fever pitch that is seen in Germany.

The new offering appears to offer significant cost savings to SMEs and should increase BT's market share. Strategically, like the consumer converged telephony service Fusion, it shows the incumbent finally leveraging its dual position as fixed line market leader and MVNO, to create services that are more than the sum of their parts in terms of customer attraction and retention.

The Business Plan with Mobile gives businesses a five per cent discount on their landline and mobile calls and includes a range of price caps on landline calls up to an hour in length, from ten pence for UK landline to landline calls, to 25 pence for calls to UK mobiles, and 20p for EU landlines. The scheme also includes a software tool that will analyse a firm's telecoms spending, and could help businesses control costs.

This shows BT starting to hit back against the move by cellcos into fixed line services, which usually include price comparisons with BT rates – though the incumbent says they always compare with its standard business rates, which few customers actually pay.

In particular, Orange Landline (based on a deal with Cable and Wireless) has made a strong impact on the UK small business sector, but to stay ahead, this needs to introduce single bill-ing and a more streamlined tariff structure – after price cuts themselves, transparency and simple billing are the main priorities of smaller telecoms users.

We could also expect T-Mobile to bring its experience of the German fixed-mobile convergence market to the UK SME space, launching its @home offerings for small companies – aimed at residents in Germany, this is similar to Fusion, providing low cost, flat rate calls when in the homezone, handing off to the mobile network when out of range.

Orange could add its own similar offering, HomeZone, currently available in France, to the UK for the SME base to supplement Landline for Business, and it has already pre-announced a 'branch-in-a-box' customer premises device on which to deliver additional services, such as full fixed-mobile convergence. This could well be based on the LiveBox unit currently provided by its sister company, the ISP Wanadoo, which supports VoIP calls over broadband connections.

The likely next step is that this will be connected by a Wi-Fi link, using a technology like UMA (Unlicensed Mobile Access), to the cellphone system and repackaged for small business convergence. This would make the Orange handset the only necessary phone for business use, whether on the fixed, Wi-Fi or cellular network.

With all these players forging partnerships with mobile or fixed line carriers in order to offer converged services, the advantage, in the access market, of owning the networks is becoming less obvious, and some carriers will even look to move towards a wholesale-only model.

BT could come under fire from Carphone Warehouse/One Tel, for instance, which offers a business mobile service across Vodafone, One Tel and UK landlines for 8.5p and 21.3p flat rate to other mobile networks.

The way to counter these cut-price players will be to start to include value added benefits traditionally only offered to large enterprises, such as free insurance or online self-provisioning tools, and these are already starting to filter down to the medium business layer. On the wholesale side, of course, the value to be generated from a mobile or landline network is growing with all the interest inconverged services.

The ailing C&W has its Orange deal, and many others will follow, with Colt a clear candidate to strike up an MVNO deal and offer bundled converged services as part of its bid to expand its customer base to smaller companies.

Copyright © 2006, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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