Pipeline Publishing, Volume 4, Issue 1
This Month's Issue:
Come Together:
Fixed-Mobile Convergence
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Who's Your Daddy?
The Characteristics and Drivers of FMC

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By Wedge Greene and Barbara Lancaster

FMC – Is it schizophrenic?

Capital Expense constraints have forced service providers to be more deliberate in prioritizing their spending. This is a reality we have all come to know over the past few years. Today, there are two major, and separate, spending campaigns, building two coexisting, yet separate networks:

  • Larger pipes enabling big broadband to the home,

  • Greater coverage and bandwidth for mobile service.

These investments are succeeding in providing more termination points with more transmission capacity. Yet these two networks compete – first for development capital, and once in place, for customer use. Nevertheless, all over the world, Fixed-Mobile Convergence (FMC) programs are grabbing the headlines, with Service Providers publicly announcing their intention to move in this direction. Can the build outs of today’s isolated networks be integrated via some form of coherent planning? Are current product introduction programs sufficient to yield some synergy from these separate investments? Will the mergers and acquisitions that bring wired and wireless service providers together be the catalyst for successful convergence? Are we barking up a tree after the raccoon is gone?

Enter Alice 4 years ago - the cell phone as an access station in the house. This set the service provider community ablaze. Would it be successful? How can I duplicate this service in my country? This energized the fledgling FMC movement. Basically, the FMC vision is about each customer carrying one access device that does it all. It will:

  • operate in the home like a wireless terminal connecting to the home gateway and hence to the land-based network;

Will the mergers and acquisitions that bring wired and wireless service providers together be the catalyst for successful convergence?

  • home to an associated provider & connect via mobile 3GPP networks when out of the house;

  • and potentially connect to any WiFi access point and seek out its homed network.

Simple concept: one device, one unified network, always on, always connected via the most efficient access path available.

This is clearly a ways off, so why be so concerned about FMC today? Perhaps it is because study after study shows that consumers are shutting off their fixed-line voice service and converting into mobile only consumers. “Thus far in the US the substitution effect has been one way: many consumers are substituting a wireless phone for wired phone and making their wireless service their only telephone service. For local and long distance companies this trend has been disastrous—resulting in a steady decline in the customer base and revenue.” [Fixed Mobile Convergence: Single Phone Solutions for Wireless, Wireline, and VoIP Convergence 2005-2010] Profits in the telecom industry are currently so low, that in 2005 just six percent of subscribers switching to mobile-only-service had a heavy impact on the industry. A just breaking 2007 study by Stephen Blumberg of Centers for Disease Control and Prevention finds that a quarter to a third of adults under 30 now have only a mobile phone – and that over 10% of all adults have cut the land-line tie. This switchover is increasing at accelerated rates.

Consumers are switching away from fixed-line to mobile-only voice phone service; yet still buying triple-play & broadband services for their homes. If it were not for bundling phone with DSL and Fiber, would even more be cutting off land phone access? Land-based providers attempting to stem the erosion to mobile-only-service with bundled DSL/voice and unlimited long distance plans are only gaining a stopgap bridge – they need to find new revenue generating service solutions and new ways of insuring customer loyalty. Many industry pundits are proclaiming that the mobile service providers are in the right place at the right time to become the dominant force in the marketplace. Taking a leading role in FMC appears to be one way that the wired service providers can try to retain control and dominance, and maybe, just maybe, turn back the clock. At least one industry veteran sees that as a lost cause:

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