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Full of Promise

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VoicenData Bureau
New Update

Fixed mobile convergence (FMC), one of the several iterations of the

convergence trend, has been a much hyped concept. Today, FMC is a global

phenomenon for the telecom business, and is currently being pushed forward by

both fixed line and full service operators. FMC is still at its infancy, and

progress on convergence of the FMC terminal and network is just beginning to be

seen.

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FMC provides a powerful business platform to develop new

revenue-generating services and to transform user experiences. It is not just

about unified communications or seamless data communications. Many analysts'

forecasts, however, tend to be based upon a single existing application-unified

communications. These single-product forecasts underestimate the opportunities

for the creation of new FMC services. According to ABI Research, the FMC market

is set to expand to 250 mn users by 2012 and as per the Strategy Analytics

research, enterprise FMC market is expected to reach $50 bn by 2012.

Prototypical services for enterprise and home users (which

is in place in the developed markets of Europe, Asia, and North America); the

launch of bundled services and VoIP over WLAN, as well as industry consolidation

and integration of networks and platforms around IP-are all pointing towards

convergence. This is driving the trend in the form of fixed and mobile telephony

convergence. The objective is to provide both the services with a single phone,

which could switch between networks ad hoc. Several industry standardization

activities have been completed in this area such as voice call continuity (VCC)

specifications defined by the 3GPP.

Expert Panel

Chandan Mendiratta, vice president, service provider, system

engineering, Cisco India & SAARC



Varun Dubey, marketing manager, APAC, Aricent

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Dominating Trends



Different service providers (fixed-line, mobile, integrated) are likely to

exploit FMC in different ways in order to improve their competitive position.

However, certain trends that will be common amongst all are:

FMC demand forces heterogeneous network carriers to

partner or expand their capabilities:
Most fixed and cable operators will

add a mobile service component to their offerings to match integrated service

providers. All service providers' strategies will move in the direction of

supporting heterogeneous fixed and cellular networks for voice, data, content,

applications, and niche video applications.

Cable companies pursuing an FMC strategy will find it

easier to sell to business users:
Consumers are strongly motivated by video

content and the cost advantages of bundling, business buyers-a relatively new

market for cable operators-are motivated by FMC's ability to increase

productivity for key employees. FMC products such as unified communications,

seamless data access across multiple networks, mobilizing of applications for

seamless use across multiple networks, and seamless videoconferencing and voice

sessions are all emerging as important new services.

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Video is important for triple and quad plays: Video

connection in the home represents a competitive advantage for service providers

such as cable or fixed providers with a broadband/IPTV/satellite-based video

offering. As users view more video on their broadband connection, it's likely

that providers of video services will tier their broadband offerings to protect

their video services, effectively forcing integration of video and broadband as

bundled video offerings.

VoIP will transform traditional telephony purchase

priorities:
Given the adequate quality and convenience, consumers may

perceive mobile and VoIP services as more valuable than a traditional dedicated

phone line. Thus, it is likely that the revenue from fixed phone service will

decline because of the increasing price pressure from cable companies, and

specialty Internet based VoIP solutions offering fixed voice service at close to

free pricing.

Video will drive the need for more capacity and

partnering:
Companies with fixed-line infrastructure are busy expanding

their fixed bandwidth delivery capabilities to support new services and HDTV.

Mobile service providers are not well positioned for the emerging world of 'long

content' HDTV. In the near future, HDTV cannot be delivered on a large scale by

the current or proposed mobile standards, so it is likely that ownership of

video/broadband pipe will give video-capable vendors an advantage over mobile

vendors that fail to pair up with a video/fixed-line partner. This advantage,

when combined with FMC, gives cable companies an opportunity for significant

gain in market share with a quad play plus strategy (a strategy that includes

FMC based services).

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FMC's greater integration will encourage service

consolidation:
FMC provides an additional reason for a customer to

consolidate services with a single company. Benefits are easier to obtain from

one vendor. Support for a more complex product is easier to obtain. The more

competitive a market, the more likely it is that competitors will be forced to

change their value-added profile.

CIO Concerns

  • Increasing productivity by effectively integrating existing TDM PBXs

    and IP PBXs with wireless networks
  • A web based, easy-to-use interface for users makes it easy to

    configure preferences
  • Increasing consumer demand for a connected experience across all

    devices
  • Better bandwidth capabilities to enable high-end data and video

    services
  • Separate fixed and mobile devices, independent infrastructures, and

    separate voice mail systems
  • Right business model with reference to usage and associated charges
  • User experience

For integrated-service providers that offer both fixed and

cellular mobile services, FMC from a short term perspective may be a dilemma.

Integrated service providers may experience erosion in minutes of cellular usage

by making it easy for customers to move on-premises or at-home phone calls to a

'free' or lower-cost, on-premises Wi-Fi connection (but with a compensating FMC

fee). However, in addition to the FMC fees and new mobile revenue, there is a

significant multi-billion dollar upside for integrated service providers. FMC

can reduce the capacity that operators need to purchase, or alternatively FMC

can increase the productivity of their purchased spectrum. In some FMC

deployment scenarios, not only can an integrated service provider experience an

increase in average revenue per user (ARPU) from charging for FMC features, it

can also experience an increase in ARPUS/kilometer-a particularly important

issue in areas where spectrum productivity is a concern.

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Growth Drivers



In today's office environment, the majority of employees still have to

switch between a desk phone and their mobile. This is not only inconvenient but

costly for a business as it has to support and cover the costs of these two

phones. As mobility increases, and more people work outside the office,

employees are still forced to give out multiple phone numbers. FMC promotes a

single handset that can be used anywhere, anytime, therefore presenting a good

solution to the problem.

Challenges



The FMC business model requires that operators invest in and modify their

network infrastructures to cost-effectively move to converged core architecture

and be able to deploy services that can generate new revenue as quickly as

possible.

For integrated service operators, the major challenge is

that consumers now have more choice in how they access content-both in terms of

technology and of pricing model. Over the time, integrated service operators had

to compete with terrestrial over-the-air broadcasters, satellite broadcasters,

movie rental operations, and now Internet based competition.

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From a business model perspective, increase in the variety

of download and transmission approaches has also led to an ever increasing

number of business models. Content can be acquired by purchase, by rental, by

purchased download, by rental download, by advertising supported media, by

subscription, financed by a sponsor, or by product placement. There is pressure

on traditional bundled content approaches to permit a-la-carte purchase of

channels and content.

In this new competitive landscape, mobile cellular vendors

will aggressively pursue fixed line business with broadband wireless offerings

(3G, mobile WiMax, LTE). They will use femtocells or broadband routers to

compete with traditional fixed-line voice services from integrated companies and

traditional telephone offerings.

Fixed and cable operators will add mobile capabilities

through partnering or spectrum acquisition. Disruptive new service providers

will offer services supported by an advertising business model.

Integrated-service operators can pursue a first-mover advantage if they can

integrate their fixed and (owned or rented) mobile business processes.

FMC brings a lot of promise to the telecom industry. It

seeks to enable the delivery of user-centric ubiquitous services, improve

customer loyalty, and ensure capex and opex cost reduction through a migration

to IP. However, FMC also brings with it some challenges. Service providers stand

to exploit new revenue streams and increase their share of the subscriber

wallet. But they can also lose customers if they do not take action, and they

possibly stand to lose revenue if they move to convergent packages.

Archana Singh



archanasi@cybermedia.co.in

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