Fixed-Mobile Convergence: opportunities and strategies for the mass market

This publication has been discontinued on July 19, 2011.

Introduction

Abstract

As the network and end-user technologies underpinning fixed and mobile services become increasingly aligned around Internet Protocol, new services are appearing that attempt to harness the best of both mobile and fixed worlds. In response, operators have had to consider their strategic options in their quest for future growth. Many operators are placing strategic bets on fixed-mobile convergence (FMC) to satisfy a perceived customer demand, as mobile becomes redefined as personalised mobility services for an access-independent era.

But what are the prospects for FMC? What are the risks and potential rewards for embarking down this path? How will the industry evolve? Which telcos are best positioned to emerge as the winners and why?

Fixed-Mobile Convergence: opportunities and strategies for the mass market answers your key questions:

• how can fixed-only operators utilise FMC as a defensive weapon against fixed--mobile substitution (FMS) and what are the risks to their existing businesses?
• is FMC a new opportunity for mobile carriers looking for growth beyond maturing mobile markets with saturated penetration rates?
• what are the options for mobile operators who do not have a fixed-broadband service in their portfolio and want to go-it-alone with a mobile-only strategy?
• how can integrated fixed--mobile operators leverage their presence in both markets to offer converged services that are simple to use and simple to understand for the mass market consumer?

Fixed-Mobile Convergence: opportunities and strategies for the mass market analyses the strategic opportunities and threats which FMC poses, by operator type:

• fixed-only operators
• mobile-only operators
• fixed-mobile integrated operators

The report provides forecasts for fixed--mobile convergence in Western Europe, 2005-2010, including:

• Western European households with broadband and mobile, 2005--2010
• Western European households with dual-mode FMC services, 2005--2010
• Penetration of Western European households with broadband and mobile,
• 2005--2010
• FMC penetration of total households in Western Europe, 2005--2010
• Number of individual FMC handsets in Western Europe, 2005--2010
• Dual-mode FMC handset sales in Western Europe, 2005--2010

Table of Contents

• 0 Summary
• 1 Fixed--mobile substitution raises the stakes in the battle for customer ownership
  • 1.1 Mobile services are taking an ever greater share of telecoms spend
  • 1.2 Fixed and mobile operators are targeting the same markets in pursuit of growth
  • 1.3 Some operators are responding to (and pre-empting) fixed-mobile substitution with convergence strategies
• 2 Technological advances are paving the way for fixed--mobile convergence but customer demand remains uncertain
  • 2.1 FMC standards are emerging but the lack of converged handsets is delaying roll-out of services
  • 2.2 Many of the potential demand-side drivers for FMC remain unproven
• 3 Fixed-only operators are driving current fixed--mobile convergence initiatives
  • 3.1 FMS poses the biggest threat to operators with substantial circuit-switched telephony revenues
  • 3.2 FMC encourages call substitution but could protect subscription revenues
  • 3.3 Lessons can be learned from BT Fusion, the first seamless residential FMC service on the market
  • 3.4 Fast-moving altnets are starting to differentiate themselves with FMC services (and are being snapped up)
  • 3.5 Altnets are partnering in mobility to differentiate their services and gain market share
  • 3.6 Broadband voice services provide a strong base for the launch of FMC services
  • 3.7 The opportunities for most fixed-only players far outweigh the threats, if they can obtain leverage in the mobile value chain
• 4 Integrated operators are in pole position to deliver fixed--mobile convergence but must watch margins
  • 4.1 Mobile is being redefined as personalised mobility services and bundled with broadband in the quest for future growth
  • 4.2 CPE is also evolving to capitalise on growth in non-voice services
  • 4.3 Integrated operators have to segment their market to minimise margin erosion
  • 4.4 Competitive pressures will dictate when integrated operators introduce converged services
• 5 Mobile operators could go-it-alone, but will need to effectively address the broadband market
  • 5.1 Cellular-only FMS strategies fit well with 3G plans but lack an adequate solution for Internet access
  • 5.2 Mobile-only players are currently active in FMC through partnerships but increased interest in broadband could spur deeper involvement
  • 5.3 Mobile operators may use FMC as a complementary strategy to FMS
• 6 Fixed--mobile convergence may act as a catalyst for wider industry transformation
  • 6.1 Fixed--mobile convergence will drive service providers to take a greater role in the provision of end-user devices
  • 6.2 Ownership of infrastructure improves the bottom line for FMC
  • 6.3 Customer service will be key in a world of seamless networks
  • 6.4 Integrated operators are best positioned to take advantage of the new landscape but have many challenges to overcome
  • 6.5 FMC is likely to spur consolidation of smaller players exposed by a lack of broadband or mobile services
• 7 Our forecasts show that fixed--mobile convergence services will be adopted by 16% of broadband households by 2010
  • 7.1 The French market is the most promising for long-term FMC adoption, followed by Italy and Germany
  • 7.2 Adoption of FMC services is closely aligned with broadband penetration among the mobile subscriber base
  • 7.3 FMC services are unlikely to achieve significant penetration of the addressable market until 2007

Actions

List of Figures and Tables

• Figure 4.1: An illustration of the home gateway as the centrepiece of residential convergence strategies
• Figure 7.1: Number of households with broadband and mobile subscription(s) in Western Europe, 2005--2010
• Figure 7.2: Western European FMC subscriber households as a subset of households with broadband and mobile subscriptions
• Figure 7.3: Individual subscribers associated with FMC services
• Figure 7.4: Dual-mode FMC handset sales in Western Europe, 2005-2010
• Table 2.1: Network architectures for dual-mode FMC services
• Table 3.1: Dual-mode FMC initiatives by fixed-only operators
• Table 3.2: BT Fusion service characteristics
• Table 3.3: Service characteristics of freenet.des iP1
• Table 3.4: Opportunities and threats for fixed-only operators
• Table 4.1: Mass-market dual-mode FMC initiatives (actual or planned) from integrated operators
• Table 4.2: France Telecoms residential FMC services (includes bundled services)
• Table 4.3: Opportunities and threats for integrated operators
• Table 5.1: O2 Germanys KPIs in comparison to market average at March 2005
• Table 5.2: Service characteristics of Vodafone D2s Zuhause portfolio
• Table 5.3: Opportunities and threats in dual-mode FMC for mobile-only operators
• Table 6.1: Positioning of service providers for FMC
• Table 7.1: Market prospects for FMC services in Western Europe

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