Product Type: Market Research Report
Published by: Pyramid Research
Published: April 2007
Product Code: R8-553Description Executive Summary
About Fixed-mobile Services and Fixed-mobile Convergence
�� The phrase “fixed-mobile services” generates much confusion. We have developed a framework which allows us to distinguish between different fixed-mobile service concepts. Fixed-mobile services are the key umbrella concept within this framework, referring to services through which one service provider captures customers’ voice or data traffic on a mobile network, or a combination of fixed and mobile networks. Services fall into three main categories: the fixed-mobile service bundle category, fixed-mobile substitution services, and fixed-mobile convergent services such as UMA and SIP-based dual-mode services. The last category is the primary focus of this report.
On the Urgency of Deploying FMC
- Our view is that mobile operators cannot afford to be complacent about FMC, although for some the pressure is higher than it is for others. The reasons are many: revenue growth is tough to find, mobile data hasn’t quite reached the momentum it should, FMS is an easy, low-hanging fruit, fixed telcos are doing it, and capturing fixed traffic requires technologies which account for the cost side of rapid traffic growth.
- The FMS revenue opportunity remains a low-hanging fruit and a target too attractive to ignore. The number of mobile-only households is picking up and mobile traffic growth potential remains quite considerable, especially in the five largest European markets (Germany, UK, Italy, Spain, and France) as well as Japan and USA. In such markets as Germany, the fixed-mobile substitution revenue opportunity is estimated to reach US$1.74bn, higher than the US$1.7bn revenue potential of mobile data ARPS, assuming a 5% increase.
On the Market Readiness of FMC Technologies
- Our conclusion is not particularly reassuring: most of the existing FMC technologies are still not at the stage where service providers’ main requirements are satisfied. Home zone technology—the least disruptive and fully market-ready—scores the highest in our readiness framework; more players are adopting UMA, but for most, the technology still has to convince that it is here for the long haul. The introduction of fully-fledged IMS platforms and IMS-based SIP services, on the other hand, is still at least 3-5 years away.
On What Has Worked, and What Hasn’t
- FMC performance to-date has been mixed. Some services (e.g., Orange’s Unik) have seen some success, but others (e.g., Deutsche Telekom’s T-One) have largely failed. The reasons for FMC service failures have been many: Service limitations, inability to compete with pure mobile offers on price, and a lack of differentiating features. But handsets have been the main issue: if devices are no good, the service is doomed.
On What MNOs Can Do while Waiting for FMC:
Commercial Convergence
- While FMC service and network convergence remain the ultimate destination, commercial convergence is the answer in the short term. Commercial convergence includes providing a single bill, point of sale, a unified account management. For some integrated providers, commercial convergence is already a reality in the corporate space, but not quite yet in the mass consumer market.
On the Outlook for FMC
- Our outlook on FMC adoption is moderate; we expect to see more teething problems with FMC services, and few of the commercial offers will become an immediate commercial success. At the end of 2006, there were less than 400,000 FMC subscriptions globally. We expect that in 2007, the number of UMA and dual-mode subscribers will quadruple, reaching 18m in 2011.
Table of Contents
- Acronyms and Abbreviations
- Executive Summary
- Introduction
- Section 1: Distinguishing Fixed-Mobile Substitution, Replacement, and Convergence
- From FMS to FMC
- Section 2: Can MNOs Afford to Wait for FMC?
- MNOs under Pressure: Looking for Growth, Wherever It May Be
- Looking for Solutions (1): Emerging Markets: Attractive, but No Longer Cheap
- Looking for Solutions (2): Mobile Data, So Close—Yet so Far
- Looking for Solutions (3): Fixed-Mobile Substitution Is the Low-hanging Fruit
- Final Incentive: Fixed Telcos Are Pushing FMC More Aggressively Than MNOs
- The Case Against FMC: Do MNOs Only Need to Slash Prices?
- MNOs Offering Broadband: Another Option that Has a Ways to Go
- The MNO Case for FMC: The Cost Side of Traffic Spikes, the Flip Side of Low Price Strategies, and the Profitability of Mobile Corporate Services
- Our Call: MNOs Can’t Afford to Be Complacent About FMC
- Section 3: FMC Technologies: What Is Ready, What Is Not
- The Readiness Factor: Disruptiveness and CPE Availability
- Our Conclusion: Not Reassuring
- Option Available Now: Home Zone/Cell ID: Ideal Fixed-Mobile Substitution Technology for Voice18
- Option Available Later: Femtocells: Fixed Indoor Coverage and Enabling Mobile Broadband in the Home
- Femtocell Readiness: Horizon 2008, and the Set-top Box Opportunity
- UMA: The Most Mature FMC Technology, but Still a Lot of Convincing to Do
- Dual-Mode SIP: Pre-IMS, Fixed-centric for now, and an Alternative to UMA
- Voice Call Continuity: Horizon 2008-09
- Conclusion: Mobile-centric Consumer FMC Choices Are Down to Home Zone and UMA Today and Femtocells Tomorrow
- Section 4: FMC Case Study Analysis: What Has Worked, What Hasn’t
- CASE STUDY: FMC Initial Failures: T-One, Onephone, Unica, and Others
- CASE STUDY: Aggressive FMC Push by Orange Starts Paying Off
- CASE STUDY: FMC Helps Brasil Telecom’s Fixed and Mobile
- Section 5: What Operators Can Do While Waiting for FMC, and FMC Next Steps
- FMC: A Matter of When, Not If
- Despite Slow FMC Start, Here Is why We Think Early Launches Are Good
- One Size Will Not Fit All
- However, the Question Remains: What to Do in the Meantime?
- CASE STUDY: Commercial Convergence Services
- Section 6: FMC Adoption and Revenue Forecasts
- FMC Subscribers—Slow Initial Growth
- Next for FMC: Competing with Triple- and Quad-play for the Household
- FMC Revenue—Suitably Small
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