Free article: Dual-mode services have fundamental weaknesses 

The telecoms industry’s approach to fixed–mobile convergence (FMC) has been to focus on device convergence – particularly dual-mode voice handsets based on unlicensed mobile access technology (UMA). However, operators have had relatively little success with these services so far, for a number of reasons that are to do with fundamental aspects of converged devices for voice services. Hence, even with improvements, UMA dual-mode voice services may continue to be a small opportunity for network operators and equipment vendors.

UMA is a standard that enables access to the services of a mobile network through a broadband connection and local area wireless technology, such as WiFi. It enables network operators to deliver converged services (mostly voice telephony) over a combination of cellular and broadband access networks using dual-mode cellular/WiFi handsets. Such a handset allows automatic roaming and handover between cellular and WiFi access, enabling subscribers to receive a consistent set of services as they move between networks.

Most UMA voice services have failed to achieve significant take-up among end users, despite the strategic importance attached to these services by some operators. For example, at the launch of BT Fusion, the Chief Executive of BT Retail Ian Livingston said that BT was, “taking a world leap in pushing FMC and BT Fusion will form a significant part of our growth plans”. However, by May 2007 – nearly two years after launch – there were just 40 000 BT Fusion customers, representing only 0.2% of the number of BT fixed telephony customers. But BT is not alone in experiencing disappointing take-up, as illustrated by Figure 1.

Figure 1: Number of customers for UMA FMC services from BT (UK), Deutsche Telekom (Germany) and France Telecom (France), June 2005 to June 2007

Deutsche Telekom launched its T-One dual-mode service in Germany in August 2006, but by March 2007 the service had attracted less than 10 000 customers, at which point Deutsche Telekom decided to withdraw the service. Only France Telecom has experienced significant take-up of its FMC service, which was launched in September 2006: by June 2007, the Unik service had attracted about 298 000 customers, although this represents only 1.3% of the number of Orange mobile customers, and 1.1% of France Telecom’s fixed telephony customers. Analysis of early UMA services highlights some major drawbacks, which account for the relatively low take-up. These include:

• poor choice of handsets for customers, compared with mainstream mobile phones
• high price of handsets for operators or customers, compared with mainstream mobile phones
• strong competition from mobile operators, many of which have been increasingly pursuing FMS strategies
• lack of an effective mobile distribution channel
• lack of retail strength in fixed broadband services and home gateways
• unclear pricing and hidden costs, for example incoming calls charged at mobile rates
• complicated numbering, requiring consumers to have separate numbers for their home phone and their UMA phone, with different charges for incoming calls
• lack of segmented marketing
• failure to communicate the benefits of the services.

A number of developments to UMA-based voice services, such as wider choice of handsets, 3G data services, WiFi improvements and declining interconnect rates, will enhance the attractiveness of device convergence to some extent. However, the development of other market opportunities for UMA could actually hinder the success of UMA-based voice services, while IMS and SIP could provide an alternative means of supporting dual-mode handsets in the longer term. Furthermore, pure cellular voice services will become increasingly effective in all environments, removing the need for device convergence for voice services. Only a small number of integrated incumbent operators will achieve significant success with these services.