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“Fixed-mobile convergence” (FMC) is the theme of study in this research. This research attempts to find out: 1) the “Pull” forces coming from the market demand for FMC solutions; 2) the “Push” forces of the enabling technologies that make FMC possible; 3) the factors that will impact FMC’s future; 4) how the carriers are deploying FMC; and, 5) FMC-related opportunities for the mobile phone manufacturers.
FMC is about the convergence of telecommunication world and the Internet world. It is the former’s endeavor to benefit from Internet’s low cost, and richness in online services. It stems from the business battle for market share between the fixed network operators and the mobile operators, and it will affect the future power span of these operators. FMC trend includes the following aspects: terminal devices, services, business models, and network technologies. It is so crucial in forming the telecommunication industry’s future, which makes it the core subject of Next Generation Network implementation.
FMC is the enablement of mobile phones to use fixed network technologies, such as Wi-Fi network, corporate LANs, IP PBXs, and so on. A Wi-Fi/Cellular dual-mode mobile phone has telephony capability on both Wi-Fi network via mobile VoIP (Voice over IP) technology, and on cellular (such as GSM) network. When the end user is within the Wi-Fi hot spot coverage, the voice communication will be on top of IP. When the user is out of Wi-Fi coverage, then the phone calls are running on cellular network. For the consumers, this technology promises “any time, any where” ubiquitous connectivity and mobility, while at the lowest possible price, since VoIP is normally free or has very low cost. To deploy such products & services, the operators have both technical & business issues to deal with.
Based on the findings of this research, the market demand which accelerates converging mobile & fixed network include:
Fixed-mobile substitution (FMS), which means people are using mobile phones more often than fixed-line phones. In many Western European countries, about one third of the household do not install fixed phone lines any more. They only use mobile phones as communication vehicle. Under such circumstances, fixed-line operators are forced to fight back for their market share. FMC is one of such strategies for launching new products and services to win back the end customers.
Mobile operators need to lower the subscriber churn rate, for which they are losing customers. In the United States and some areas in Europe, mobile phone coverage in residential area is unsatisfactory, due to the high cost of building up cellular infrastructure to cover vast space. This is the main reason for the subscribers to switch operators, for the mobile operators, FMC seems a logical solution. Since household penetration rate of high-speed broadband access is high in US, Europe, and many Asian countries, with a Wi-Fi access point and Wi-Fi/cellular dual mode phone, even when the cellular signal strength is weak at home, the user is still able to make phone calls using Mobile VoIP technology on Wi-Fi. This is the origin of UMA (Unlicensed Mobile Access) technology and standard, which mobile operators are pursuing.
All network operators are under constant pressure for growing their revenue, since voice service has quickly become a commodity when flat-rate tariff model is getting prevalent. With FMC solution, mobile operators could earn back the users who are attracted away by the low cost of Internet telephony. For fixed-line operators, FMC is a mechanism for providing packaged deal of broadband access and dual-mode mobile phones. More over, they could provide “quadruple play” services to support IP TV, Video on Demand, and other Internet services to increase their revenue.
“Less is more” mentality of the consumers. Most consumers or working people nowadays have at least three telephone numbers: home phone, office phone, and mobile phone. Each one of them has its own phone bill, voice mail box, and phone book. Some people even have e-mail account, instant message account, and Internet telephony account (such as Skype screen name). The mobility or interchange between these mechanisms of communication, and to manage them is becoming complex. The consumers are asking the mobile operators to integrate their services and phone bills, which again, pulls the operator to FMC solutions.
The following are the enabling technologies that facilitate the development of FMC. Without these technologies, FMC can not take root in the telecommunication industry, and generate commercial products in the future.
VoIP (Voice over IP). VoIP service, products, and PC-based software clients have flourished in the past several years along with the exponential growth of the Internet. With the success of Vonage (pure-play VoIP service provider) and Skype (peer-to-peer internet telephony network based on PC), internet telephony has entered the main stream. Network operators that seek to lower the operation cost are turning to this technology as well. Mobile VoIP over EVDO, HSDPA, Wi-Fi, & WiMAX are getting a lot of attention recently since it can help to reduce the tariff, thus attract more users. For Mobile VoIP technologies to secure its market foothold, many issues need to be tackled, such as AEC, voice codec (compression & decompression), jitter buffer handling, SIP (Session Initiation Protocol) stack and RTP (Real-time Protocal) stack handling, power consumption, telephony UI integration, and so on.
High density of wireless broadband network such as Wi-Fi and WiMAX, and wide spread availability of wired broadband access such as xDSL and FTTH in school campus, office buildings, hot spots, transportation hubs, and homes, lay the foundation of FMC. Without such infrastructure, FMC can not thrive. With the combination of both wireless and wired broadband accessibility, Wi-Fi/cellular dual mode phone becomes practical and useful to the general public.
Converged handheld devices with multiple functionalities like push e-mail, PIM (Personal Information Management), Camera, SMS/MMS, internet browsing, phone book, Calendar, and so on, are getting very popular among business professionals in the last two, three years. With the advent of 3G network, data transmission need for email and SMS, more than voice, has increased peoples’ appetite for more powerful devices. Smartphones or PDA Phones that use open operating system such as Windows Mobile, Linux, or Symbian, have become powerful productivity and connectivity tools that cater to consumers’ needs, and have gained great success. The market demand helped to increase the sales volume, and drive down the unit price, which in turns stimulate more buyers.
Bluetooth and Wi-Fi capabilities are newly added functions that further facilitates mobile VoIP in an economical way. Once the phone makers have taken care of issues like AEC (Acoustic Echo Cancellation), voice codec (compression/decompression), power consumption, integrated user interface for telephony, CPU loading, GSM/Wi-Fi handover, and so on, the Wi-Fi/Cellular dual-mode phone are taking the center stage of FMC.
The factors that will impact the future direction of FMC:
Uncertainty of the FMC-related standards, especially for UMA (Unlicensed Mobile Access). UMA was adopted as FMC solution mostly by the mobile operators, however, it was considered as an intermediate solution toward IMS (IP Multimedia Subsystem), which so far was mainly adopted by fixed-line operators. UMA-compliant products are yet to be launched and proved by the market in the later half of year 2006, its fate uncertain at this moment. SIP (Session Initiation Protocol) is now de facto standard for VoIP, yet its implementation has many variations depending on the vendor. As for IMS (IP Multimedia Subsystem), its standardization process is still undergoing, VCC (Voice Call Continuity) specification is not final yet, the commercialization of IMS could take another two to four years. With all these standards evolving, both consumers and businesses could hesitate in their purchase decisions, and this may impose negative effect on FMC.
Business model of the operators. How they are going to launch FMC service, at what price, with which handheld device, will affect the end customers’ willingness to purchase. They need to provide good incentives for the end users to switch to the new dual-mode phone, and the UI needs to be intuitive enough to shorten the learning curve, and at attractive price.
As described above, the quality of the handset itself plays a critical role on the future of FMC, and its user friendliness and benefits will define the development of FMC.
How fast the enterprises will upgrade their PBX and networking facilities to integrate outbound data and voice communication. VoIP, IP PBX/Centrex, office software, and phone vendors are working together now to provide the enterprises “premised-based” FMC solutions. These solutions promise the executives more efficient administration of the phone bills, better productivity of the employees, and better customer relationship, and so on. Enterprises are the early adopters and test beds for FMC. If they find it useful, it will be helpful for the sales and distribution to the home and personal market.
FMC deployment strategy varies from one operator to the other. Pure-play wired operators tend to become MVNO (Mobile Virtual Network Operator), or at least to have alliance with the mobile operators, so that they could get access to the mobile network infrastructure. Since wireline operators in most cases are also suppliers of broadband service to the home, they will take advantage of this infrastructure, and provide residential gateway (e.g. Wi-Fi access point) and Cellular/Wi-Fi dual-mode mobile phone as the FMC solution for the home market. In preparing for future, they tend to select IMS-compliant network equipments.
Mobile Operators prefer UMA technology as FMC solution. It is comparatively simple in deployment in the network. Quite a few mobile operators are now in trial run of UMA. In the future, how to migrate UMA to IMS will be a challenge for those who adopt the former.
For the mobile phone makers, FMC trend indicates the market opportunity of: UMA dual-mode phone, SIP Wi-Fi single-mode phone, and SIP Wi-Fi/Cellular dual-mode phone. Yet, unlike general purpose consumer market, these FMC phones need to be tied hand-in-hand with the operators for better integration of services and tariff plans. If these solutions are targeted at the enterprises, the phone makers need to work with IP PBX vendors as well. How to work with these parties, and come out good, integrated phones, is a great challenge.
Fixed-mobile convergence is still evolving in the telecommunication world, with many vendors and parties involved, and each has its unique way of FMC implementation and business model. How it will turn out takes continuous research and observation. Due to its scale and influence for the future, the effort will definitely be worthwhile.
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