Operators talk fixed-mobile convergence

BT Group is spearheading a global telecommunications initiative aimed at promoting combined fixed-line and mobile services to both consumers and businesses.

The U.K. network operator, which announced a new fixed-mobile service in Britain last month, is in advanced talks to establish a global alliance of wireline and wireless operators eager to tap the market for convergent services, said Steve Andrews, chief of BT’s mobility and convergence unit, Tuesday in a telephone interview.

“There are quite a number of operators — both fixed and mobile — that are interested in the alliance,” Andrews said. “Fixed-mobile convergence is clearly on the roadmap of operators that want to create additional revenue streams from new value-added services.”

The vision is for people to use one phone with one number, address book and voicemail bank, taking advantage of cheap, high-speed connectivity in their fixed-line home or office setting, while enjoying mobility outside in the wide-area cell phone network.

The vision also includes a “seamless” hand-over of calls between fixed-line and mobile networks.

“We see huge pent-up demand for simplicity,” Andrews said.

Fixed-mobile convergence isn’t an entirely new development. Several operators, including BT, have tested numerous systems over the past decade. One of the largest tests in the late 1990s involved DECT (Digital Enhanced Cordless Telecommunications), designed primarily for use in the home or office, and GSM (Global System for Mobile Communications).

DECT-GSM convergence never really took off, largely because users had to manually switch calls when moving from the DECT network into the GSM network or vise versa — and that meant losing the call, according to Andrews. In addition, early converged handsets were bulky and expensive.

With its Fixed-Mobile Convergence Alliance, BT hopes to muster enough support among network operators and handset manufacturers to establish common technology standards and drive competition that could lead to high-quality, low-priced phones.

The development work will focus initially on 3G (third-generation) handsets with Bluetooth capability, according to Andrews. These phones will allow users at home or in the office to link to Bluetooth base stations with their fixed broadband connections, and to roam onto mobile networks when outside the Bluetooth footprint. Data speeds up to 700K bit/sec will be possible in the wireless Bluetooth cell, where calls could also be priced at normal fixed-line rates or lower, he said.

Bluetooth will be the technology of choice until 3G phones with Wi-Fi capability become available at prices comparable for high-end mobile phones, according to Andrews. “We don’t expect to see high-end, well-priced handsets with Wi-Fi capability for another 18 months to two years,” he said.

Although Bluetooth will continue to play a role after that, Wi-Fi-enabled mobile phones will dominate the market, Andrews said. “Our development work will have a heavy focus on Wi-Fi,” Andrews said.

The alliance will work closely with major standards bodies to establish standards for both devices and network systems, he said.

Korea Telecom and Brasil Telecom have joined BT in the alliance, according to Andrews. Several other operators, he said, have signed nondisclosure agreements.

For wireline operators, the converged service could halt the numbers of customers, particularly young people, who are increasingly substituting their fixed-lines with mobile phones, according to Angel Dobardziev, senior analyst with Ovum. Mobile substitution has already reached 27% in Finland, he said.

For mobile operators, on the other hand, Dobardziev sees less of an incentive to push convergence. “Mobile operators would have to invest in their networks and tie up management resources,” he said. “And the result could be that they cannibalize their mobile voice service by allowing calls from the home zone to be made at cheap fixed-line rates.”

Operators most likely to be interested in fixed-mobile convergence are those that have both wireline and wireless operating units, such as Nippon Telegraph and Telephone (NTT), Deutsche Telekom and France Télécom.

NTT DoCoMo, the mobile phone subsidiary in the NTT group, is not in the alliance, said spokesman Takumi Suzuki. “We are looking at fixed-mobile convergence,” he said. “It’s a possibility but we haven’t made a decision.”

U.K. operator Mm02, which was spun out of BT, isn’t interested, according to spokesman Simon Gordon. “This whole alliance seems a bit biased to the fixed-line world,” he said.

Perhaps, but one analyst believes convergence could be a good thing for mobile operators, especially those fed up with high consumer churn. “Many mobile operators are looking at ways to break into the enterprise market in order to offset consumer churn,” said Emma McClune, wireless analyst with Current Analysis. “Fixed-mobile convergence could be one of many doors to the enterprise market.”