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BT's Flat Fusion

BT Group plc (NYSE: BT; London: BTA) has not given up on its fixed/mobile convergence (FMC) service, Fusion, despite flat subscriber growth. The operator now has 40,000 Fusion customers, which is the same number of customers it had about two months ago. [Ed. note: George Bush would call that "staying the course."] (See Gateway Key to BT's Fusion Flop.)

With nearly two years of experience since BT first launched Fusion in 2005, BT says its FMC service, based on unlicensed mobile access (UMA) technology, is difficult to sell to consumers.

Steve Andrews, BT's group chief of mobility and convergence, says the reasons for the slow takeup are device availability and a complex marketing message: "It's not easy to explain [Fusion] to customers… it's not about cheap minutes."

Here's the value proposition as BT sees it: Fusion offers cheaper calls when you're at home and in range of your WiFi-enabled Home Hub, or within a BT Openzone WiFi hotspot and any of 13 wireless cities in the U.K. It delivers five times faster Internet access on the Home Hub compared to GPRS; and it provides better indoor coverage compared to other mobile services.

"It's not straightforward," says a BT spokesman. "We will be refining the marketing until it hits home with consumers."

BT improved the Fusion service at the beginning of this year by adding WiFi access, three new devices, and simplifying the tariffs. But these changes do not appear to have affected customer takeup. (See BT Adds WiFi to Fusion and BT Adds WiFi Devices.)

"It's difficult to explain to the customer the benefit of an FMC solution because to them it's about cost savings," says Mayur Sahni, senior analyst at Current Analysis . "But FMC is about value-added features, and that's hard to communicate to the consumer."

But complicated marketing messages have not hindered Orange (NYSE: FTE)'s Orange from attracting 125,000 customers in France to its Unik UMA-based FMC service in just six months. France Telecom has a couple of advantages over BT with a larger installed base of home gateways, called Livebox, as well as easier device acquisition because it is also a mobile operator. (See FT vs BT on FMC.)

On the device front, Andrews says BT will introduce 10 new dualmode WiFi/GSM devices in the next three to six months. In addition, BT will start to sell its devices at the U.K. retailer Phones 4U. The operator will also launch a prepaid version of the service.

"We're not happy with the number of customers we've got," says David Hughes, director of wireless broadband at BT, but adds that BT is not considering cancelling the service. (See DT Cancels FMC Service.)

The operator will certainly look to change its Fusion fortunes with new devices, retail distribution, and prepaid offers. In fact, BT says orders have picked up more recently. They are coming in at 1,000 per week, according to a spokesman.

"If the device is right and the packaging is right, then I don't see why [Fusion] won't take off," says Sahni at Current Analysis.

— Michelle Donegan, European Editor, Light Reading

Gabriel Brown 12/5/2012 | 3:07:41 PM
re: BT's Flat Fusion The assertion that "it's not about cheap minutes" seems optimistic. Mobile phones already work just about everywhere in the UKGǪ so what's the point of Fusion?

No wonder it's hard to explain.
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