BT’s dual answer to Skype

A phone to be launched next month epitomises the cataclysmic changes and baffling economics that characterise telephony today. The Motorola V560 can act as a standard quad-band GSM phone using the Vodafone network away from home and as a standard wireless phone when you return.

In fact it uses a Voice-over-IP link rather than an old style telephone line but, as you can make and receive calls on the same number, the effect is the same. The phone is part of a package called BT Fusion, open to BT broadband subscribers.

When you sign up you are given the V560 plus and a device that doubles as router for a Wifi home network and a Bluetooth hub that functions much like the Dect base station of a home wireless phone.

You are charged standard Vodafone rates when you make a mobile call and BT Together rates for calls via your local network – 5.5p an hour off peak and 3p a minute peak. The V560 switches modes when within range of its base station, but if you are still on a mobile call you continue to pay standard rates. However, if you initiate a call at the base you still pay the lower rate if you continue it outside.

Steven Evans, chief executive of BT’s converged mobility portfolio, said: ‘This was the easiest way to do the charging. There will probably be some people who take care to call from their homes but we think it will balance out.’

BT seems remarkably laid back about the transition to VoIP, which you would think would threaten its dial-up revenues. It is encouraging the transition with its PC messaging client BT Communicator, as well as Fusion. ‘We regard VoIP as a natural progression,’ Evans said, pointing out that it still represents only a tiny fraction of voice traffic.

He said VoIP is more of a threat to mobile operators who don’t want their voice and data revenue streams ‘cannibalised’ by people charging voice calls to their 3G data bills.

But how can BT expect paid-for VoIP services like Communicator and Fusion to compete with the likes of Skype that charge nothing at all for IP-to-IP connections?

Evans agrees that Skype will take some business but says its peer-to-peer model will not be financially viable if everyone came to use it because someone would have to pay for ‘all those bits and bytes’ travelling the network.

He points out that you need a laptop or connected PDA to use Skype on the move and the number of those is tiny compared the number of mobile phones globally. And Skype, unlike mobile phone operators, is not going to be able to give PDAs away to hook people into its services.