BT is spearheading a global telecommunications initiative aimed at promoting combined fixed-line and mobile services to both consumers and businesses.
BT, which announced a new fixed-mobile service in the UK last month, is in advanced talks to establish a global alliance of wireline and wireless operators eager to tap the market for convergent services.
"There are quite a number of operators - both fixed and mobile - that are interested in the alliance," said said Steve Andrews, chief of BT's mobility and convergence unit.
"Fixed-mobile convergence is clearly on the roadmap of operators that want to create additional revenue streams from new value-added services."
The vision is for people to use one phone with one number, address book and voicemail bank, taking advantage of cheap, high-speed connectivity in their fixed-line home or office setting, while enjoying mobility outside in the wide-area mobile phone network.
The vision also includes a "seamless" handover of calls between fixed-line and mobile networks.
Fixed-mobile convergence is not an entirely new development. Several operators, including BT, have tested numerous systems over the past decade.
One of the largest tests in the late 1990s involved Dect (Digital Enhanced Cordless Telecommunications), designed primarily for use in the home or office, and GSM.
Dect-GSM convergence never really took off, largely because users had to switch calls manually when moving from the Dect network into the GSM network or vice versa, and that meant losing the call. Early converged handsets were also bulky and expensive.
With its Fixed-Mobile Convergence Alliance, BT hopes to muster enough support among network operators and handset manufacturers to establish common technology standards and drive competition that could lead to high-quality, low-priced phones.
The development work will focus initially on 3G handsets with Bluetooth capability. These phones will allow users at home or in the office to link to Bluetooth base stations with their fixed broadband connections, and to roam onto mobile networks when outside the Bluetooth footprint.
Data speeds up to 700Kbps will be possible in the wireless Bluetooth cell, where calls could also be priced at normal fixed-line rates or lower.
Bluetooth will be the technology of choice until 3G phones with Wi-Fi capability become available at prices comparable for high-end mobile phones. "We don't expect to see high-end, well-priced handsets with Wi-Fi capability for another 18 months to two years," said Andrews.
Although Bluetooth will continue to play a role after that, Wi-Fi-enabled mobile phones will dominate the market. "Our development work will have a heavy focus on Wi-Fi," Andrews said.
The alliance will work closely with major standards bodies to establish standards for both devices and network systems.
Korea Telecom and Brasil Telecom have joined BT in the alliance, and several other operators have signed nondisclosure agreements.
For wireline operators, the converged service could halt the numbers of customers, particularly young people, who are increasingly substituting their fixed-lines with mobile phones, according to Angel Dobardziev, senior analyst with Ovum. Mobile substitution has already reached 27% in Finland, he added.
For mobile operators, on the other hand, Dobardziev saw less of an incentive to push convergence.
"Mobile operators would have to invest in their networks and tie up management resources. The result could be that they cannibalise their mobile voice service by allowing calls from the home zone to be made at cheap fixed-line rates."
Operators most likely to be interested in fixed-mobile convergence are those that have both wireline and wireless operating units, such as Nippon Telegraph and Telephone, Deutsche Telekom and France Télécom.
NTT DoCoMo s not in the alliance. "We are looking at fixed-mobile convergence," said spokesman Takumi Suzuki. "It's a possibility but we haven't made a decision."
Mm02, which was spun out of BT, is not interested, according to spokesman Simon Gordon. "This whole alliance seems a bit biased to the fixed-line world." he said.
However, one analyst believes convergence could be a good thing for mobile operators, especially those fed up with high consumer churn.
"Many mobile operators are looking at ways to break into the enterprise market to offset consumer churn," said Emma McClune, wireless analyst with Current Analysis. "Fixed-mobile convergence could be one of many doors to the enterprise market."
John Blau writes for IDG News Service