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What's taking fixed-mobile convergence so long?

FMC’s slow uptake due to carrier foot-dragging, cautious customers, some say

By , Network World
December 03, 2007 12:00 AM ET

Network World - Fixed-mobile convergence — the seamless switching between cellular and local networks for mobile users — has been hailed for more than three years as a potential boon for enterprise networks.

So, where is FMC already?

Despite the hype, heavy adoption isn’t expected until the next decade, analysts say. Dragging it down is carrier reluctance to market FMC services and tepid demand among cash-strapped U. S. companies still trialing products from established vendors and newcomers.

“Why would [carriers] want to do anything to disrupt the nature of the return that they’re getting in tariffed services?” asks Robert Rosenberg, president of Insight Research, referring to wireline and wireless carriers such as Verizon and AT&T, which continue to see growing wireless revenue and fat profit margins of 40% to 45% every quarter. “Naturally, they are much happier to take your minutes of use and apply them to cell phones. Same would [be true for] a tariffed voice service. There’s really no incentive for them to rock that boat.”

Both wireline service providers and cellular providers lose revenue when calls are moved off of their respective networks and onto the enterprise’s wireless LAN (WLAN). They lose additional revenue if the off-site traffic is routed to another enterprise network, Insight notes.

Other industry watchers agree.

“[FMC] is set to decimate incumbent telephone companies, reducing them to providers of broadband services only,” wrote Anton Wahlman of ThinkEquity Partners in a recent investment white paper. “FMC will have a dramatic impact on the service provider landscape, draining much of the profit from mobility services, and cutting deeply into fixed voice service revenues.”

Wireless carriers in particular have little incentive to promote FMC because they are already enjoying increased revenue as employees put more minutes on their cell phones. Any FMC solution offered by a wireless carrier would move this traffic to the enterprise WLAN, negating that revenue opportunity, Rosenberg says. That’s why some carriers are pushing FMC alternatives such as femtocells, which are indoor base stations designed to extend cellular service reach.

Carrier progress

That’s not to say, however, that carriers haven’t at least made some FMC progress. Cincinnati Bell earlier this year launched an FMC-based service called CB Home Run that lets customers initiate and terminate wireless calls on a fixed Wi-Fi network and hand them off to a mobile GSM network when beyond the range of the Wi-Fi cell.

Cincinnati Bell says it turned up the service to provide better reception in homes, offices and around its 300 Wi-Fi hotspots. But the carrier acknowledges that revenue might be lost by offering the service — calls originating from a Wi-Fi connection don't tap into the customer's bucket of minutes; they are essentially free.

Ostensibly, Cincinnati Bell can make up some of that lost revenue through customer loyalty and bundling on other services, such as a high-speed Internet and Wi-Fi hotspot service to fill out CB Home Run, analysts say.

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