Many young people never use land lines

The former telecoms monopoly plans to launch a family-friendly mobile service in direct competition with MMO2, which is planning a joint venture with Tesco.

BT launched a limited mobile service called Mobile Sense through its website last October, using MMO2's wireless network.

But it plans to buy network capacity for its new venture from Germany's T-Mobile.

U-turn denied

Families who sign up for BT's Home Plan will receive a single bill for all their mobile use - and they will be sent alerts if one family member is spending too much.

You'd have thought they'd learnt their lesson from their last attempt at doing mobile - but never mind Sir Christopher Gent, Vodafone

A BT spokesman said it had spoken to a number of companies, including MMO2, before reaching a deal with T-Mobile.

"We see T-Mobile as a strong, flexible player in the market. They already have a similar relationship with Virgin Mobile," a BT spokesman said.

BT floated off MMO2 in 2001, in an effort to pay off its debt mountain.

A spokesman denied its latest plans were a strategic U-turn.

"When we spun-off O2, it was the best decision for shareholders, investors and customers," he said.

Families targeted

The telecoms giant is anxious to reach a new generation of younger phone users who never use its fixed-line services.

BT Retail chief executive Pierre Danon said: "We believe that BT is the first company to recognise that customers are not just individuals, but parts of families.

"Family members who are likely to already have an existing relationship with BT can now also get all their mobiles from us on the same contract."

MMO2 said its joint venture with Tesco, which is due to launch in the autumn, was also aimed squarely at the family market.

"Tesco is a universally-recognised brand and the most successful retailer in the country. People trust Tesco," an MMO2 spokesman said.

He said Tesco Mobile would not be issuing single family bills, but Tesco customers would be able to use their club card points to purchase credit.

Swipe at BT

The new service is a 50:50 joint venture between the retail giant and MMO2, unlike BT's plan, which entails buying network capacity from T-Mobile, he added.

And - in a further swipe at BT - he said a single family bill was "a bad idea, psychologically", because it would be much larger than individual bills.

MMO2 said its ultimate aim was to grab an extra 5% of the UK market with its Tesco venture, on top of the 24% it already says it has.

By comparison, BT said its initial target was 100,000 Home Plan, which will be sold through High Street mobile shops, customers by the end of the year.

It said its long-term aim was 1 million customers, which would give it a UK market share of about 2%.

Industry observers said BT's decision to spin off MMO2 had been a mistake.

Vodafone 'not worried'

Neil McCartney, an independent telecoms analyst, said: "They cut themselves off from one of the few areas of growth in the telecoms market."

He said a lot of customers had moved from fixed-line phones to mobile service, with about 7% of households now having no land line.

"BT lost a lot of customers and never got them back," Mr McCartney told the BBC.

Phil Roberts, a director of telecoms consultants Mason's, said BT has come up with a "clever marketing ploy", which was likely to be copied by other companies.

But outgoing Vodafone chief executive Christopher Gent said he was not worried by BT's plans.

"With regard to BT, you'd have thought they'd learnt their lesson from their last attempt at doing mobile - but never mind," Sir Christopher told the Independent newspaper.

New product

Under BT's Home Plan, Monthly line rental will cost �15 for the first phone and �10 each for up to five extra handsets for family members.

Calls to the family number will be free for the first two minutes.

BT research found the average person phones home five times a week, with most of the calls lasting two minutes or less.

BT said it hopes to follow up the launch of Home Plan with a similar service aimed at groups of young professionals.

The company said it was also working on a system that will allow people to make calls from their mobiles through BT's fixed line network.

The system, which is being developed with Sweden's Ericsson, should mean cheaper calls and better reception, BT said.