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June 4, 2007
Industry analysts have warned that while Fixed Mobile Convergence (FMC) services offer great potential, the technology faces an uphill struggle for adoption in both the consumer and enterprise sectors.
A report due out from analyst house, Informa Telecoms & Media, on Tuesday forecasts 170 million FMC subscribers worldwide by 2012 generating $33.4bn in revenue. The majority of these subs are expected to be within the consumer segment, totalling 145 million by 2012 but relative penetration will be lower than the enterprise segment where 8.8 per cent of the total subscriber base will use FMC, versus 4.8 per cent of consumers.
Paul Merry, senior analyst at Informa and lead author of the study, said the disparity between the two groups is a good indication of one of the major challenges facing FMC.
“Business use of FMC makes sense as it enables a number of attractive services such as unified messaging, IP PBX integration and a single communication account that can be managed by corporate IT personnel,” Merry said. Whereas consumer FMC in comparison is less of an attraction to consumers, at least in its early stages, because it only offers the convenience of a single bill and discounted in home pricing at present.
Industry analyst IDC also commented this week that many of the operator launches to date have highlighted how difficult it is to get an FMC service off the ground.
IDC believes that operators considering consumer FMC services should avoid positioning the technology as a new standalone product. Instead, it should be positioned as a complement to existing broadband and mobile services.
The analyst warns that in particular, operators planning on launching an FMC service need to ensure that a significant number of their existing broadband subscribers are already familiar with home networking equipment. Home broadband penetration combined with home network penetration is the necessary prerequisite for the launch of an FMC service, the company said.
Informa adds that consumer FMC faces additional challenges in capturing the consumer imagination, as, “current FMC is just voice done cheap – not very interesting for the consumer and easily counteracted by cell players.”
Last week, France Telecom, which many industry watchers see as having a successful FMC strategy, revealed that it has an installed base of 4.8 million LiveBox gateways and around 140,000 Unik/Unique subscriptions.
UK incumbent BT on the other hand, is still pegged as having 40,000 Fusion subscribers, which would give it flat growth over the past few months, and in excess of 1 million Home Hubs installed. Dean Bubley over at Disruptive Analysis notes that this suggests a similar 3-4 per cent penetration figure for FMC services in homes with operator supplied wifi gateways.
Informa’s Merry adds that the process is not helped by a certain lack of forward movement on the issue of standardisation.
“Uncertainty remains on the technological evolution toward converged networks,” Merry said. IMS was lauded as the solution that would provide fully standardised convergent capabilities but the timescale and cost of implementation has caused increasing concern, while interim solutions such as UMA and femtocells, which solve the problems of a lack of dual-mode handsets, have also appeared but do not provide the type of rich IP-orientated services envisaged by FMC.
Within the chaos of the FMC landscape, there are fixed operators desperate to counteract fixed mobile substitution (FMS) and support IMS as it allows them to keep control of the call event; there are cellular operators which are attempting to increase FMS and are supportive of UMA and femtocell solutions as they allow the call event to stay in their control; and there are also broadband and hybrid operators which will adopt any technology in a bid to offer the fullest selection of services in order to increase customer take up and retention.
The Informa report, ‘Fixed Mobile Convergence – 2nd edition’, examines the evolving nature of FMC networks, business opportunities and challenges for all players in the value chain. More info is available here.
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