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Analysis
Service providers are under pressure; several significant market trends
are undermining their legacy voice-based, network-orientated business
models. These include fixed access line decline, mobile subscriber
saturation in developed economies, and basic voice ARPU decline.
However, there are other trends—such as increasing broadband
penetration and VoIP ramp up—that offer opportunities for
service providers that can shift to a next-generation, voice and
data-based, service-orientated business model. More and more people are
using mobile phones as their home phones, keeping their landlines
strictly for broadband service, while some of them also access data
services on their mobile phones, and their laptop computers through
WiFi, 2.5G, and 3G mobile networks.
Service definitions are blurring, and the current siloed service model
(i.e., one network per service) no longer works. To grow revenue
streams and achieve sustained profitability, service providers need to
restructure their business around a broader and more complex service
model. For many service providers, bundling several services over a
fixed broadband package (e.g., triple play) has been the response so
far, but that does not address mobility needs. Adding a fixed mobile
converged service as a quadruple play or new standalone service looks
promising, and service providers are already investigating this
possibility. In our 2005 study of 44 service providers’ next
gen voice deployment plans (Service Provider Plans for Next Gen Voice:
North America, Europe, and Asia Pacific), 45% of wireless mobile voice
respondents plan to integrate wireline and mobile services. However, to
achieve this quadruple bundle of voice, video, data, and mobility,
changes are required to the network, and enabling fixed-mobile
convergence (FMC) from a network and services perspective is
challenging.
Opinion
There are many ways to define FMC. Starting at the service layer, FMC
envisions a future where there is no difference between fixed line and
mobile services, and a single device is used for wireline and wireless
applications. This could be a handset that at home can be docked for a
wireline connection and battery recharging, but also works wirelessly,
connecting to a WiFi (including fixed WiMAX) network for nomadic
broadband, or to a mobile (2G-3G or mobile WiMAX) network for true
mobility. Mobile phones would benefit from the value-added features of
fixed line (e.g., caller ID, call waiting), and fixed line phones would
benefit from mobility. This would be provided over a single converged
network under a single phone number, with a single bill and a single
point of contact for customer service.
Since the beginning of 2006, there has been a flurry of FMC
announcements suggesting that service providers of all types are
embracing the concept of FMC services for both enterprise and
residential applications. FMC is already driving spending in next
generation networks going all-IP, and has resulted in interesting
partnerships between fixed and mobile players (e.g., NTL/Virgin Mobile,
joint venture between Sprint Nextel and cable MSOs Comcast, Time Warner
Cable, Cox Communications, and Advance/Newhouse Communications).
However, service providers have yet to merge their core networks.
Although technically possible now, the implementation of a common
infrastructure providing converged fixed and mobile services brings
issues associated with ensuring enhanced service quality, reliability,
and service level differentiation. This in turn touches various aspects
of the service provider’s daily operations. As a result,
implementation will occur in gradual stages. Dual-mode phones and
select services are being launched as a first step that in many
instances does not necessitate IMS components, but major network
transformations will follow in order to implement true FMC.
One challenging but necessary issue is that of reorganizing structure
and merging various separate and independent groups of people (e.g.,
transport, switching, access) into a multidisciplinary team. The next
challenge is gradually phasing in IMS deployments to bring the ultimate
glue that will bridge existing and next generation networks, and a
multitude of access agnostic service options. Technology aside, many
operators may need to feel the heat of service competition from
non-traditional competitors to force them to accelerate their
implementation of IMS and enable fixed-mobile convergence at the
network and service levels. By doing so, service providers will finally
be able to shut down their legacy networks in five to ten years.
Log on to www.info.infonetics.com
to download sample data from Infonetics’ Web site.
Analyst contact info:
Stéphane Téral
Directing Analyst, Service Provider Next Gen Voice and Mobile Core
INFONETICS RESEARCH, Inc.
?900 East Hamilton Ave., Suite 230, Campbell, CA 95008 USA
??+1 408.583.3371 direct
??+1 408.583.0011 main
+1 408.583.0017 fax
stephane@infonetics.com
www.infonetics.com
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©Infonetics Research, Service Provider Plansfor Next Gen Voice: North America, Europe, and Asia Pacific 2005
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