Press release: Dual-mode handsets could be a distraction from real convergence opportunities

October 2007 – 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, How to Succeed with Fixed-Mobile Convergence.

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 40 000 BT Fusion 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 from the new report 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 dual-mode 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."

This new report examines the reality of FMC, its impact so far and likely future developments. It covers a broad range of FMC initiatives, including device convergence (for example, UMA and SIP), network convergence (to an integrated IP network) and marketing convergence (for example, integrated pricing plans and distribution). It identifies pragmatic steps that operators can take in order to achieve significant benefits from FMC and avoid major implementation hurdles.