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Fixed-Mobile Convergence (FMC) could expand telecoms service revenues 15% by 2009. The first round of adopters will be fixed service providers, for many of them; fixed-mobile convergence cannot come soon enough. Every quarter of subscribers and traffic lost is due to fixed-mobile substitution, which impacts the fixed providers’ revenue and profits directly, and serves as a reminder that prompt action is required.
Pyramid Research Manager, Svetlana Issaeva comments, “Ironically, players in the best position to launch FMC – operators with both fixed and mobile joint arms – also have the hardest time convincing the mobile side to play the game for fear of killing the mobile hen that lays golden eggs.” The answer is time and competition. A hoard of alternative fixed-line operators, mobile challengers and VoIP providers are eyeing the convergence space; as mobile markets mature and voice prices continue declining, pressure will grow to join forces.
Mobile operators’ inertia in fixed-mobile convergence is easily explained by the fact that all their attention is aimed at making 3G work. Continuing – if much slower -- growth of mobile revenue combined with fear to lose traffic to WLAN networks is another reason for the “Wait and See” approach. It does not mean, however, that business case for mobile operator-driven convergence does not exist. First of all, mobile IP voice provides an immediate opportunity for customer retention through differentiation. Second, mobile provider’s options for joining the convergence play are expanding along with the number of solutions for integrated WLAN-cellular service. In fact, we believe that mobile operators can afford to wait until the technology matures, but hardly more than another year.
The promise of FMC is lucrative, but it will take a lot of effort to deliver results. The first stage of providing service bundles from hybrid operators with fixed and mobile arms will require internal organizational support and coordination; other providers will need to choose wisely to find future partners or acquisition targets. The move to all-IP networks and services will be even more challenging: VoIP is not yet a fully tamed medium and QoS issues, delays and security continue to haunt IP providers.
This article is a brief view from Pyramid Research’s upcoming report, Fixed-Mobile Convergence: Impact, Revenue and Business Models. To learn more or purchase the report, visit our online store.
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