BT 'BluePhone' Fusion is better than Skype because...?

Analysis BT has gone and done it: launched BluePhone under the new name of BT Fusion, even though it still doesn't have a WiFi version, or any way of selling this product. Why? Probably, because it wants to preserve the concept of phone numbers.

Fusion is a system which does exactly what the world's phone manufacturers could have done three years ago: uses the phone's own Bluetooth software to do VoIP through an Internet gateway. You can start a call in the street, using Vodafone. Then, walk through your front door and automatically switch the call to your Bluetooth hub, without dropping the line.

It didn't happen three years ago, because the world's mobile operators sabotaged the technology. Shortsightedly, perhaps, the operators told the phone builders: "If your phone can do VoIP over Bluetooth, we won't sell it."

What BT can't say, because it doesn't know, is whether it still has a chance of making the idea work.

The announcement says: "A BT Fusion 10 minute off peak rate mobile call from home will cost up to 95% less than the same call using a typical mobile competitor package."

That's true. Off peak, BluePhone calls cost 5.5 pence per hour. Most cellphone networks would charge you around three to six pounds for that hour's conversation.

Three years ago, it might have been a success, because three years ago, there was no such thing as Skype offering completely free phone calls over WiFi hotspots using a PDA phone. Come to that, three years ago, there were no PDA phones and precious few WiFi hotspots. Companies like RedM still dreamed of selling access points based on Bluetooth, rather than on WiFi.

The story behind the launch of Fusion is that BT will almost certainly announce a "business version" in a couple of months, when it has productised a WiFi system which is being prototyped in Canada, and tested in Adastral Park.

Today's launch is a simple test market. Four hundred customers have ordered the new package, and will be getting a brand-new WiFi/Bluetooth combined router, which they can plug into BT Broadband ADSL at home. They will also get a phone from Motorola - a V560 GSM phone - with a little extra software. And they get a Vodafone SIM card offering a special deal. The special deal would have been very, very special three years ago. It would have given cellphone users the ability to make and receive calls on their ordinary cellphone number at home - without paying cellular call charges. Even better, it would have meant they'd get a good signal at home, even if the cellular coverage was poor (it often is, at home). To the savvy consumer, today, there are too many questions for which BT Fusion doesn't offer answers.

As one visitor to today’s Newgate House launch ceremony put it: "Why would I pay ten quid a month for a service charging 5p an hour offpeak and 15p for five minutes peak, when I can pick up my Skype hand-held and call free? Why would Carphone Warehouse consider stocking this package? Why would anybody with a working SIP phone even look at it? And most important, where is the WiFi version?"

The "ease of use" tag is what BT Retail CEO, Ian Livingston, believes will sell this to ordinary users. He believes that a simple package of BT Broadband, Bluetooth hub and Motorola phone, all for the cost of installing ADSL, will appeal to people who don't know how to set up Yahoo! Messenger with BT phone gateway, or how to set up Skype, or how to install a WiFi hotspot.

"We promised to launch the world's first seamless combined fixed and mobile service," he said, emphasising the "seamless" word. And that, say analysts, is close to being true; but it's too late. "This is the Rover 75 of the phone business," said one analyst at the launch. "It looked brilliant on paper, but it's taken them so long to get it to market that it's out of date. It's also not ready.

Signs of prototype syndrome:

* If you place a call while on the cellular Vodafone network, and walk into the house, the call will indeed switch seamlessly to the home Bluetooth hub. But the billing won't change - the call will continue to be billed to Vodafone at the same rate you were on when you dialled

* If you use a Bluetooth headset, then as you walk into the house, you'll have a choice of staying on Vodafone, or losing the call. The phone can't talk to the Bluetooth hub and the headset at the same time.

* There are already several PDA phones capable of talking to both Bluetooth and WiFi - but the Motorola V560 isn't one of them.

* The Bluetooth hub actually has WiFi... but you can't use it for Fusion calls, even if you had a phone that supported WiFi, because the network isn't set up to accept a call over WiFi.

* Only six phones can be "paired" with your hub, and only three of those can share the hub with live calls. BT will have to wait for the WiFi version before this fulfills the promise of "phone calls anywhere" because most subscribers will expect to be able to use the Fusion phone at work. Three calls simultaneously per hub won't appeal to any but the smallest companies.

* Customers who want to register with the service have to order BT Broadband to provide the Internet connection - it won't work on anybody else's either ADSL or cable system - and have to accept a Vodafone SIM - nobody else was interested in partnering.

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