Dual-Mode Handsets Could Be a Distraction from the Real Convergence Opportunities

Most network operators will need to offer services over both fixed and mobile access networks. However, a narrow focus on dual-mode services based on Unlicensed Mobile Access (UMA) could distract operators from achieving market breakthroughs with alternative fixed-mobile convergence (FMC) approaches, according to a new report published by Analysys.

A number of operators have already launched dual-mode UMA services, and on Friday 28 September 2007 TeliaSonera launched its Home Free service in Sweden.

"Many people regard FMC as being dual-mode handset services that use WLAN for voice communication in the home and workplace, while using cellular services elsewhere," says report co-author, Dr Alastair Brydon.

"Early take-up of such services has been disappointing. For example, nearly two years after its launch, there were only 40000 BTFusion customers, representing just 0.2% of the number of BT fixed telephony customers. There may be much better alternatives than dual-mode handsets if operators want to deliver successful FMC services."

Key findings include:

• Device convergence - where operators offer dual-mode mobile devices that can access both fixed and mobile network services - is only one form of FMC. Early consumer UMA services lack simplicity, face strong competition and fail to target receptive market segments. BT is not alone in experiencing disappointing take-up. Deutsche Telekom launched its T-One UMA-based service in Germany in August 2006, but the service had attracted less than 10 000 customers by March 2007.
• A number of developments to UMA-based voice services - such as an improved range of handsets during 2007 - will enhance their attractiveness. However, these advances will be countered by improvements in cellular-only services, which will become more affordable, for example.
• Operators must not overlook the more significant opportunities presented by market convergence. This involves operators combining the marketing of fixed and mobile services - for example, with bundled pricing, special promotion and/or utilising common distribution channels - without necessarily delivering the services to a single device or using a common integrated network.

"Innovative converged marketing of fixed and mobile services can result in propositions that are much more appealing to end users than completely separate services," says co-author Dr Mark Heath. "Marketing convergence can also avoid non-integrated operators being disadvantaged compared to integrated operators by their more limited opportunities with device and network convergence."

Posted to the site on 3rd October 2007