Landline Operators Driving Fixed-Mobile Convergence
Fixed telecoms operators will be the driving force behind fixed mobile convergence over the next five years, according to a report from Informa Telecoms & Media. The study predicts 92 million subscribers by 2011 generating US$28 billion in revenues and comprising 3% of overall subscriptions. Fixed operators will aggressively roll out FMC services in order to target the ongoing threat of 'fixed mobile substitution' - where people are using mobiles rather than landlines.
This is already presenting a significant challenge in certain territories and fixed operators are expected to respond by targeting FMC to gain share of mobile voice revenues through MVNO agreements.
"Much has been made of new, converged technologies cannibalising mobile operators revenues, but none have made the dramatic impact feared" commented Mark Newman, Chief Research Officer at Informa Telecoms & Media. "As broadband penetration continues to grow and costs continue to drop, fixed operators will look to grow their revenues by offering advanced services such as FMC, and this will begin to have significant impact in the next 4-5 years."
Mobile operators, on the other hand, will take a cautious approach to FMC deployment over this period, and are expected to offer services where competition is highest to combat fixed operator activity. In addition, they will continue to leverage the higher returns offered by fixed mobile substitution and are also likely to await the development of 3.5G and technologies to combat fixed line and DSL operators head on. This will be achieved with competitive pricing in order to reap the greatest returns out of the current fixed mobile substitution 'cash cow'.
A consequence of this activity is a predicted increase in sales of dual mode handsets to 5% of global handset sales: over 47 million units per year by 2011. The majority of these sales (85%) will be to consumers adopting FMC services such as BT Fusion for convenience and cost benefits, although a significant proportion of revenues will be from enterprises adopting FMC as part of a unified communications strategy for more effective business interactions.
Key adoption areas for FMC will be the Asia Pacific region, where other technologies may be leapfrogged, North America and Europe, where broadband penetration is high.
"Convergence will take time as it involves bringing technologies and business models into a completely new alignment. FMC's share of total communications revenues will be small for several years, but this is just the start," commented Paul Merry, Senior Analyst, Informa. "The money at stake is nevertheless huge, and all the various players are looking over each other shoulders to see what happens next."
"Fixed operators are viewing FMC as a positive step towards protecting their market share in an era where technology and convenience are creating an increasing momentum in favour of fixed mobile substitution," explained Newman. "The mobile operators can't prevent convergence, but they can and will continue to focus on what works so well for them now - with market penetration growing to only 3% in five years, the potential for FMC is still to be fully realised."
Posted to the site on 27th April 2006
