BT is close to a deal that would let its users share Wi-Fi with the Fon network of shared home hotspots, according to a Reuters report.
Under the rumoured deal, BT would download Fon software onto the Home Hub Wi-Fi access points its broadband users are increasingly adopting. People using its Fusion converged handset service would then be able to make calls at any location using Home Hub, as well as any place using Fon's Fonero hardware.
"This could change the dynamics considerably," said Dean Bubley of Disruptive Analysis. "I see an awful lot of Home Hub SSIDs in London, so this could probably create a pretty decent patchwork of 'coverage'."
Fon's service uses different wireless LAN identities (SSIDs) for shared and private networks on the same device, and aims to get millions of people worldwide to become "Foneros" with public hotspots running on their home Wi-Fi systems. BT Fusion users can currently make calls at their home or office network, or at BT's Openzone hotspots.
The deal brings together complementary weaknesses, and could produce a much stronger offering than Fusion or Fon on its own. Fon relies on domestic users taking the technological initiative and, behind the gloss of its high-profile investors, has been widely dismissed as a naïve technological bubble based on over-subsidised hardware. Fusion, meanwhile, has struggled to get users, as it offers limited value outside the home - and only landline-rate calls indoors, instead of free calls.
Endorsement from BT would give a clear signal that the provider does not object to its customers sharing broadband - something technically forbidden under many ISP contracts - and go a long way to defuse fears of a potential legal challenge to Fon.
An upgrade to Fon could be handled automatically by remote control, according to one source, leaving users to decide whether to enable their router for roaming - presumably in the case of Fusion users, in exchange for access to others' routers.
The deal is viable mainly because BT, unlike all other European incumbent operators, has no mobile network of its own. It can expand Fusion any way it wishes, without cannibalising any phone revenues, except for fixed line traffic, which is already rapidly declining in value.
The move would move Fusion traffic away from the GSM portion provided through an MVNO deal with Vodafone - something BT must want to do, given the high cost of roaming between that network and its own.
Cheap calls in more places could also be a good way to keep broadband customers from moving to other providers.
Neither BT nor FON have confirmed the rumour, but Reuters claims it came from two sources close to the deal. Fon, founded by entrepreneur Martin Varsavsky who also founded Spanish companies Jazztel and Ya.com, is backed by Google, Skype, Index Ventures and Sequoia Capital.