Vodafone could be about to buy BT, the UK's fixed line telecoms company, for $35 billion. Or, Vodafone might be on the verge of being taken over by a Venture Capital group for $175 billion! Depends on who you believe, of course, but clearly the world's largest mobile phone company is at something of a crossroads. Huge boardroom infighting is getting ugly, and the mobile phone market is changing radically, too, with fixed and mobile businesses converging thanks to WiFi phones and Voice over IP (VoIP).

[Source: thisismoney.co.uk, zdnet.co.uk]

Vodafone is buy/sell rumour

Vodafone is at a crossroads, and its board looks increasingly confused as to what to do. It recently announced the sale of its Japanese arm, is looking to sell off its Australian arm, and Verizon has made a $40 billion offer to take over Vodafone's stake in the US company. Some of these disposals are due to Vodafone chief executive Arun Sarin trying to appear decisive and appease investors, but the potential buyout of BT is much deeper, and affects the whole mobile phone industry.

When mobile phones needed mobile networks, a mobile network operator could focus exclusively on mobile phones, leaving land line companies to focus on, well, land lines. Hence Vodafone doesn't have a land line business, and BT sold its mobile phone arm, which subsequently rebranded itself as O2.

But times are changing. UK mobile phone company is owned by France Telecom, a French land line company. O2 was recently snapped up by Telefonica, a Spanish land line company. Vodafone is in a different position, however. Because of its huge size, no land line company can buy it all to itself, leaving the company exposed as it focuses solely on mobile phones. With more and more mobile phone handsets being released that support voice calls over IP using WiFi connections, and an increasingly converging market, Vodafone will soon find its mobile cash cow being eroded. It needs a land line company, and quickly.

Whether this means the company, and other mobile operators, realize they're just bit carriers, and drop their insistence on trying to create the next killer mobile application, throwing open their walled gardens and drastically reducing their data charges as they do so, remains to be seen, but we can only hope. Mobile data applications cannot thrive until we have open plan tariffs that let users pay a fixed rate a month, rather than paying per byte. That is, after all, what helped broadband take off. Until Vodafone and others realize the same is true for mobile networks, mobile data will remain too expensive to use over existing mobile networks - but not over land line networks via WiFi.