The U.S. telecom industry appears to largely be treading water when it comes to fixed-mobile convergence-with much talk about the subject and a few tentative sallies in that direction, but not an inordinate amount of action so far.
However, many operators are in the process of making decisions that are likely to push them in one direction or another depending on their assets, according to a research note from ABI Research-which concluded that voice over Wi-Fi dual-mode services are ramping up, particularly in Europe and to some extent in the United States.
T-Mobile USA Inc. is generally seen as the most aggressive domestic carrier on FMC, making use of its Wi-Fi hotspot assets and is expected to soon launch a nationwide Unlicensed Mobile Access-based dual-mode Wi-Fi/cellular service. The carrier has been trialing its T-Mobile Hotspot @Home service, which is designed to provide better coverage and unlimited calling for subscribers whose dual-mode cellular phones switch over to Wi-Fi while at home or at a T-Mobile USA hotspot. Only when out of Wi-Fi range does the phone rely on the carrier’s cellular network.
Cannibalizing concerns
One significant difference in T-Mobile USA’s position, noted Robert Rosenberg, president of Insight Research Corp., is that the company doesn’t have a wireline operation to worry about cannibalizing. He opined that the reason most U.S. telecom companies have been slow to offer FMC services is that the biggest companies among them, such as Verizon Communications Inc. and AT&T Inc., have both wireline and wireless operations and would prefer to maintain two revenue streams rather than risk endangering one or the other-most likely wireline-with converged services.
Service plans like AT&T’s Unity service utilize both the carrier’s wireline and wireless network to create an in-network calling community-but Rosenberg said that such a service, while technically containing an element of FMC, “isn’t really pushing the envelope. What you want is products that bring it together, not promotions.”
He added that it’s unclear at this point whether FMC will begin to “pop” first in the consumer or business space, but noted that there are real benefits for businesses in terms of potentially reducing wireless costs.
Spectrum concerns to drive FMC
The expected high prices and fierce competition for spectrum in the upcoming 700 MHz auction may very well prompt companies to take a closer look at FMC, according to Jorge Fuenzalida, vice president of VeriSign Consulting Services, formerly inCode Wireless. Companies seeking to make better use of their existing spectrum or trying to avoid buying large amounts of pricey 700 MHz spectrum might consider using in-home networks to offload some of the traffic as a way to stretch their capacity, he added.
Cable companies will also be a player as FMC takes shape, Fuenzalida said. So far, the joint venture between cable companies and Sprint Nextel Corp. has yielded “fairly straightforward” converged products focused on accessing cable content and services. But, he added, “It’s just a joint venture, and [cable] may need a more intimate relationship to drive all the applications that they may want to offer one day.”
Despite the challenges, however, the FMC trend may be closer to becoming a market reality as carriers seek out ways to offer unique products in order to head off customer churn.
“The old view on wireless was, how do you pump up minutes? Because every minute was so profitable,” Fuenzalida said. Now, he added, the biggest cost to operators is churn, “so you do everything you can to keep customers, like offer innovative services.”
