Is fixed mobile convergence in crisis?

Convergence has taken a battering in recent months as operators have failed to deliver the mass of subscribers they promised with the offer of multi-platform converged devices. Despite this Informa Telecoms and Media forecast that over 190 million subscribers will be FMC users by 2013.

The propensity to hype new services is an unfortunate characteristic of the cellular industry and more often than not leads to the services themselves being mauled when they do not live up to expectations. Fixed Mobile Convergence is one example where hype has failed to live up to expectation.

FMC subscribers are expected to increase by 2013 but these subscribers are only forecast to equate to around 5% of the global market at this time, states Paul Merry author of Informa Telecoms and Media’s FMC and Converged Service Strategies: the evolution of the value proposition 3rd edition. More seriously operators have failed to monetise FMC, continues Merry, “Within such an environment the justification for starting along the path to FMC becomes a real issue”.

Of the subscribers forecast the majority will be device-based users, FMC subscribers who use a dual-mode capable device to access services, although femtocell subscribers will quickly grow to deliver 46% of the total FMC subscribers forecast by 2013. Approximately 30% of device-based FMC subscribers will use data services in conjunction with voice in 2009 rising to 42% by 2013.

In order to identify the true value proposition of FMC one must look deeper at the changes FMC brings to the telecommunication service provisioning process. By looking at these changes one can identify the true value of convergence. For example, FMC creates a number of efficiencies in the provisioning, management and quality of telecoms services offered delivering cost savings and providing tools to reduce churn and improve customer satisfaction. The key to these improvements comes in the offload of data traffic from expensive cellular network platforms to fixed network infrastructure. The level of cost savings can be substantial with savings forecast to amount to approximately $5.3 billion by 2013 if operators deploy femtocell solutions in a wholesale manner.

The second major opportunity that FMC provides is as an anti-churn device with bundled service offerings acting as powerful incentives to lock-in customers. Bundled service offerings also allow operators to effectively compete through discounting with losses recouped by the increased use in other services e.g. discounting of voice to increase data or internet use within a bundled service offering.

The future of FMC is unclear but its role in improving the customer experience while increasing the efficiencies of providing cellular and fixed services are integral to its current and futures successes.

© Informa UK Ltd 2009. All rights reserved.

FMC and Convergence Service Strategies: the evolution of the value proposition - 3rd edition. More details

Now in its 3rd edition, FMC and Convergence Service Strategies strategic report provides an insight into the evolving nature of convergent networks, the business opportunities and the challenges facing the increasing number of players involved in converged telecommunications. This edition critically evaluates current and future developments, their ramifications and potential future scenarios as convergence develops.

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