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The Fixed-Mobile Convergence Hype Factor

The fixed-mobile convergence (FMC) outlook is now suspect, as most telecom operators have failed to deliver the mass of subscribers they promised. Despite this fact, Informa Telecoms and Media forecasts that over 190 million subscribers could be FMC users by 2013.

The propensity to hype new FMC services is an unfortunate characteristic of the mobile phone service industry, which leads to the services themselves being downplayed when they do not live up to expectations.

FMC subscribers are expected to increase by 2013 -- but these subscribers are only forecast to equate to around 5 percent of the global market, states Paul Merry author of Informa Telecoms and Media's report.

More seriously, mobile operators have failed to monetize FMC, continues Merry, "Within such an environment the justification for starting along the path to FMC becomes a real issue."

Of the subscribers forecast the majority will be device-based users, FMC subscribers who use a dual-mode capable device to access services, although femtocell subscribers will quickly grow to deliver 46 percent of the total FMC subscribers forecast by 2013.

Approximately 30 percent of device-based FMC subscribers will use data services in conjunction with voice in 2009 rising to 42 percent by 2013.

In order to identify the true value proposition of FMC one must look deeper at the changes FMC brings to the telecommunication service provisioning process. By looking at these changes one can identify the true value of convergence -- to a telco's internal business processes.

For example, FMC creates a number of efficiencies in the provisioning, management and quality of telecoms services offered delivering cost savings and providing tools to reduce churn and improve customer satisfaction.

The key to these improvements comes in the offload of data traffic from expensive cellular network platforms to fixed network infrastructure. The level of cost savings can be substantial with savings forecast to amount to approximately $5.3 billion by 2013 if operators deploy femtocell solutions in a wholesale manner.

The second major opportunity that FMC provides is as an anti-churn device with bundled service offerings acting as powerful incentives to lock-in customers. Bundled service offerings also allow operators to effectively compete through discounting with losses recouped by the increased use in other services.

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