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Fixed Mobile Convergence Questions Remain

According to a new study from ABI Research, fixed and mobile network operators will invest more than $450 million in capital infrastructure over the next five years to provide fixed-mobile convergence (FMC).

This will improve traffic migration to VoIP service providers and lead to implementation of more SIP-based services. ABI Research forecasts that worldwide, operators will generate $97 billion in service revenue from FMC applications in 2011, mainly from offering lower fixed-line call charges to mobile users.

"Operators are seeing their core voice revenues come under pressure from VoIP, and they need to minimize call substitution," says ABI Research analyst Ian Cox. "One way is to provide services over the broadband fixed network using a mobile device. Both dual-use and single-use devices will be able to do that over Wi-Fi and micro cellular access points in the home and office."

Cox further comments that "UMA and SIP with VCC are competing in this market with other approaches, including picocell and femtocell access points, which will lead to a dynamic and competitive market developing over the next five years."

For users, FMC will reduce call charges when the device is connected to an indoor access point. It will also allow the same device to be used everywhere with a single bill and contact list. "Convenience and lower call charges are an attractive combination," Cox notes, "but call charges need to be simple to understand, and dual-use devices need to be as appealing as single-use devices in terms of battery life, price and choice of models."

For vendors, FMC will allow continued development of SIP solutions. SIP enables new services to be introduced quickly, tried and discarded if they are not popular. A single database holds all subscriber information, leading to lower operating costs for multiple services over multiple access technologies.

Given that backdrop, I'm still left wondering if these FMC investments are based upon sound judgment, and if the revenue estimates are realistic -- considering other alternatives. Most of the FMC business plans seem to be articulated from a myopic perspective. Meaning, if low-cost national and international voice calls is the primary consumer benefit, then how can this offer be differentiated (compared to Skype, as an example) in the marketplace?

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