BT turns pioneer with fixed-mobile phone

[CoBrA-eYeS]

LONDON (Reuters) - BT Group Plc has unveiled a pioneering, low-cost cell phone that switches between fixed and mobile networks as the British company steps up efforts to stem a tide of calls moving from landline to cellular networks.

After more than a year of planning, BT said on Wednesday an initial 400 customers would use its new "BT Fusion" handset, made by U.S. vendor Motorola Inc, which hooks onto BT's fixed-line network at home or in the office and automatically latches onto a wireless network when callers are on the move.

Customers using the black and silver clamshell v560 handset, which also offers video and digital photo services, will pay land-line prices of 5.5 pence for up to one hour of off-peak calls and 3p a minute for peak calls to land-line numbers.

BT -- which is using Vodafone's mobile phone network and selling two keenly-priced tariff plans for 9.99 pounds ($18) and 14.99 pounds per month -- said an off-peak 10 minute call would cost up to 95 percent less than a typical mobile call.

"You're getting the cost of a fixed line, the convenience of a mobile and better coverage," Ian Livingston, head of BT's consumer division BT Retail told reporters on a conference call.

Consulting firm Ovum called the new service a "watershed" in a telecoms and technology industry that is offering increasingly intertwined and so-called "converged" services.

"It is not overstating the case to say that the industry will never be the same again," Ovum said.

But shares in BT, one of only a handful of European telecoms operators to own no mobile phone network of its own after demerging its mobile business in 2001, slipped 1.7 percent to 219 pence in afternoon trade.

Analysts said although the product looked interesting, the company had opted for a soft launch, so take-up would be slow before the service became more widely available in September.

PRICED TO SELL?

BT's two price deals, called BT Fusion 100 and BT Fusion 200, offer 100 and 200 minutes of free calls to any network at any time respectively. Cell phone groups such as Vodafone Group Plc, Orange and O2 Plc have price plans that cost 30 pounds per month for 200 minutes of free calls.