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FMC: Do the users care?

Flavour of the month in telcoland is the idea that fixed-mobile convergence (FMC) will save voice revenues from collapse, extend high mobile termination fees into new domains, eliminate churn and generally make investors rich and executives happy (or was it the other way round?).

Needless to say, the Telco 2.0 opinion is that we’re unconvinced of the business case. The obvious thing to state up front is that the key fixed-mobile convergence feature was available on day 1 of cellular: the ability to call between fixed and mobile phones. So we’re only looking at some relatively small improvements compared to that monumental advance.

The problem is that FMC tends to be a network-centric vendor and operator solution in search of a user problem. Pretty much every aspect of the FMC value proposition can be replicated (at least in part) by cheaper, simpler solutions. Therefore whilst we see user benefit, we don’t see rewards that justify sky-high investment in network equipment and marketing. Someone else can come in with 80% of the solution at 20% of the cost and ruin the economics.

So what’s the user problem?

  • Handoff between fixed and mobile networks? This is already solved for mobile-to-fixed! You just keep your mobile on. The other direction just doesn’t make sense: going outdoors generally means putting clothes and shoes on, or driving a car. The use case just doesn’t seem compelling.
  • Single device? My smartphone can do WiFi calls already. No new network required. Given the chipset can do FM radio, Bluetooth, 2G and 3G, I suspect it’s not beyond the bounds of possibility the throw in DECT too.
  • Single address book? This could be done by other means. For example, an enhanced DECT phone — even without broadband — could dial a freephone number in the night to sync with a networked address book. Or you could put a SIM slot in and just shuffle the data around that way.
  • Single inbound number? Easily emulated with call forwarding, and bundling/pricing changes would erase the cost issue. With ever larger buckets, mobile-to-fixed forwarding isn’t expensive anyway.
  • Single outbound number (i.e. same caller ID presented to anyone)?. Easily emulated today by IP services — just as Skype confirms your mobile number before “faking” it as your ID for outbound SMS messages (using a code sent to your mobile you then have to enter into the client).
  • Single bill? Just pay by credit card and deal with it once a month, or direct debit and never think about it again.
  • Single voicemail inbox? More interesting, but doesn’t require IMS or UMA. After all, it’s nothing more fancy than an email inbox, and we have no problem managing multiple accounts today in a single client. Plus forwarding busy/no answer calls will solve the problem for you anyway.
  • Extend in-building coverage? The picocell/femtocell solution sounds like the way to go here: backwards-compatible, simple and incremental. (Just more bad news for UMA/IMS vendors…)

There’s benefit to the operator, no doubt. Getting the users to pay for their own backhaul, and lowering spectrum costs. Mobile operators have more control over service and handsets, and want to extend this control to the liberated fixed world. Yet the price in terms of customer service and support, dealing with user-supplied gateways and contention with bandwith-hungry P2P downloads and gaming just doesn’t seem worth the effort and hype.

So far FMC has only offered small distribution gains on “standard telephony”. What would make more sense would be to expand the “better telephony” opportunities of VoIP into the cellular device. Wideband audio, presence, privacy and improved multi-modal UIs. However, we’re not holding our breath. Unless we’re supposed to infer that downloading a Yahoo or Skype client to our mobile phones is the route to the converged future…

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In the consumer market, you may well be right. It's largely about pricing arbitrage, although in future there's some quite interesting multimedia apps that can bridge fixed & mobile domains.

In the business market, it's different - in 15 years as an analyst, dual-mode enterprise FMC solutions are the first technology I've seen with more "end user pull" than "vendor push". Key "problems" to solve are high & uncontrolled cellular bills for businesses, especially intl. roaming, as well as indoor coverage (worse for 3G than 2G) and, importantly, PBX integration with cellular. A lot of businesses want to control the "mobility algorithm" inhouse, using the mobile operator as a pipe in a similar fashion to fixed VPN connections.

Picocell solutions are possible, but also have challenges.

One area that FMC does offer benefits is in offering devices/services with multiple numbers, multiple identities, multiple devices. The idea of one number/bill/phone/ID is probably the most hyped & ill-thought out bits of nonsense I encounter in this industry.

The most interesting FMC variants will generally be the "user-controlled" ones, not the "operator-controlled" services.

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