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FMC Still Technology in Search of a Market

While the last year has seen many new fixed-mobile convergence (FMC) services appear across Western Europe, it has also highlighted how truly difficult it is to get the service off the ground and stimulate market demand.

In its most recent study of FMC, IDC examines the experiences of Western European broadband service providers in launching FMC services and analyzes the key factors that contribute to their successes or failures.

"Though Orange has had the most positive start with its Unik service in France, other operators have struggled," said Jill Finger Gibson, research director, IDC EMEA. "This shows that FMC technology is moving in the right direction and is not the major hurdle to FMC adoption, at least in the consumer segment. That hurdle is getting the customer proposition correct, launching the service only once the necessary prerequisites are in place, and positioning an FMC service as a must-have rather than a nice-to-have."

I believe that an underlying issue with some FMC launches are that they were conceived primarily to benefit the service providers -- as a retention strategy -- with less focus on if and when it would truly be attractive to the customer. Granted, some broadband VAS offerings were successfully launched in the past with this limited mindset, but that's not an indication of sustainable service innovation.

IDC believes that operators that are considering consumer FMC services should avoid positioning FMC as a new standalone product. Instead, it should be positioned as a complement to existing broadband and mobile services. In particular, operators planning on launching an FMC service need to ensure that a significant number of their existing broadband subscribers are already familiar with and using home networking equipment.

Ultimately, home broadband penetration combined with home network penetration is the necessary prerequisite for the launch of an FMC service. Based on the technology and service developments over the past year, IDC estimates that the FMC services market in Western Europe will grow at a compound annual growth rate (CAGR) of 173 percent between 2006 and 2011, reaching $2.65 billion by the end of the forecast period.

During the forecast period, the major FMC opportunity will be in the consumer and small-medium business segments rather than the large enterprise segment. The first deployments of FMC have been consumer and have shown that if the messaging, pricing, and device offers are right, people will buy the service.

IDC believes that significant penetration of FMC in the enterprise sector will only occur after 2011, as the technologies needed for enterprise FMC to appeal to business technology decision-makers are still in the development stages, and enterprise adoption of new technologies is a gradual process.

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