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Why Vendors Can't Sell FMC

Light Reading
News Analysis
Light Reading
3/20/2007
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SAN JOSE, Calif. -- Spring VON 2007 -- Fixed/mobile convergence (FMC) services like dualmode voice aren't catching on very fast in the U.S. and Europe, and vendors seem mixed on how operators should make the sale to consumers.

The sale of dualmode handsets is a good measure of consumer and operator acceptance. The VP of business development for Nokia Corp. (NYSE: NOK)'s multimedia unit, Janne Kari, says his company has sold 347 million singlemode wireless handsets over the past year, but only about 39 million "convergence devices."

Kari says Asian operators are now rolling out dualmode services, that European operators are just getting going, and that North American ones have yet to seriously address the service. (See Deutsche Telekom Cancels FMC Service.)

Representatives from Nokia, Cisco Systems Inc. (Nasdaq: CSCO), BridgePort Networks Inc. , LongBoard Inc. , NewStep Networks Inc. , and Pirelli SpA (Milan: PECI.MI) have varying opinions on what might drive operators and consumers toward the technology in the future.

FMC services access resources on both wireline and wireless networks and can move content to fixed or wireless devices. The first FMC service is dualmode phone service, in which calls move back and forth between WiFi networks and cellular networks without interruption. Panelists here said future versions of dualmode will extend that voice capability to data and multimedia services.

The panelists here identified two main issues slowing down adoption of FMC services.

The first problem is IP Multimedia Subsystem (IMS). Many large incumbent carriers are now trialing IMS technology and are faced with putting together an interim solution for offering dualmode services. To do this, many are using SIP-based technology to enable something called "voice call continuity" (VCC), which refers to a basic handoff between a cellular network and a WiFi network. The operators are considering an "enabling technology" -- just a stepping stone to more feature-rich IMS based services.

The second problem, at least in North America and Europe, is lack of consumer demand. In spite of some obvious benefits like cheaper phone bills and having one phone number and one address book for all networks, many consumers have no idea what FMC means or why it's good for them. The vendors represented here didn't seem well prepared to tell them.

"Consumers are waiting for you to tell us what we want," one audience member told Cisco's senior manager of the Linksys business, Tony Wan.

Wan says he thinks consumers will demand FMC applications that enable sharing multimedia content among cellphones, set-top boxes, and PCs. "When a WiFi phone comes into the home it should be a fully participating member of the home network," Wan says. "Content that is located in the home should be able to be shared with that device, whether that content is on a set-top box or a PC."

Wan believes consumers will ultimately demand FMC services because of their innovation, not because of their price. "Service providers need to move beyond the bundle," Wan says. "They need to move past services that are tied together but really don’t have much innovation."

Andre Moskal, CTO of NewStep Networks, says that consumers want FMC to enable voice services that are just simpler. Moskal says consumers want fewer phone numbers, one address book, and one central voicemail service. He says they want access to all these services from both their home and mobile phones.

With consumer wants unclear and IMS stuck in carrier labs, network operators focus on selling what they know. "The incumbents are just interesting in signing up new subscribers; that’s what they're all about," says LongBoard CTO Bill Leslie.

— Mark Sullivan, Reporter, Light Reading

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handolkim
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handolkim,
User Rank: Light Beer
12/5/2012 | 3:12:01 PM
re: Why Vendors Can't Sell FMC
Just another case of severe geographic myopia typical of LR. Vendors are doing much better pushing FMC in APAC and many are implementing some really cool services - but hey, Asia doesn't matter does it?

Notwithstanding the fact that Asia is half the world and markets like Japan, Korea and Taiwan are pioneering IMS and FMC and implementing this year - guess this doesn't count. To paraphrase William Gibson: the future is here, it's just not yet widely distributed.
runnyme
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runnyme,
User Rank: Light Beer
12/5/2012 | 3:12:00 PM
re: Why Vendors Can't Sell FMC
Hi handolkim

It would be very helpful if you can give us some information or links showing the pioneering progress in APAC.
optodoofus
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optodoofus,
User Rank: Light Beer
12/5/2012 | 3:11:59 PM
re: Why Vendors Can't Sell FMC
> In spite of some obvious benefits like cheaper
> phone bills and having one phone number and one
> address book for all networks, many consumers
> have no idea what FMC means or why it's good for
> them.

OK, I'll bite on this. Let's take these one at a time:

1) cheaper phone bills - How exactly is FMC enabling cheaper phone bills in the US? Is some carrier offering free minutes over the WLAN? I don't pay per minute for cell service, so there is no opportunity for reduced cost per minute. So unless calls from my home are free (allowing me possibly to move to a monthly plan with fewer minutes), I fail to see how my cell phone bill will go down. More likely, my phone bill will go up because the carrier will charge me an extra fee for FMC service.

2) One phone number may appeal to some people but I think it is a terrible idea. I use my mobile phone primarily for work and my home phone primarily for personal use. Why would I want to collapse them onto one phone? All that does is make my life more complicated because now I have to take some action to be able to tell work calls from personal calls. Also, the benefit of this service seems predicated on one person per phone. That's not how my home works. Everyone in my family shares one home phone. When I go off to work, people still want to call my home and speak to someone there. So, my phone service can't come with me; it needs to stay home for other members of my family to use.

3) One address book does seem like a nice feature. Depending on the price, I might pay a little extra for this, but then again, maybe not. With Outlook integration, I can get most of this without FMC.

So, these benefits may be obvious to you, but they are not obvious to me. The one big advantage to FMC that I can see is that it enables better coverage inside people's home, where cellular service can be notoriously fickle. If I have good cell coverage already, then FMC adds nothing for me except cost and complexity. And if I don't have good coverage, then the cellular provider can enhance their coverage via FMC and potentially win my business without having to build new cell towers. But most of the benefit is theirs, not mine. It doesn't give me new features that I am clamoring for. It doesn't open the door to new revenue opportunities. It just enables high quality voice communication.

I don't find it puzzling that there is no apparent consumer demand for FMC services. If there is no value, there will be no demand. What I do find puzzling is why the industry assumes that people want FMC. IF FMC is so good for me, then show me. Show me why it is something I want. Otherwise, it will go no where.

optodoofus
runnyme
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runnyme,
User Rank: Light Beer
12/5/2012 | 3:11:59 PM
re: Why Vendors Can't Sell FMC
Exactly. That's why I cannot see any chance for it, especially the IMS based VCC solution. Too costly to run, too little to gain and the quality is in doubt.
mastersmasters
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mastersmasters,
User Rank: Light Beer
12/5/2012 | 3:11:49 PM
re: Why Vendors Can't Sell FMC
BT has finally offered consumers a worthwhile FMC package: when you are at home BT will only dock you 1 minute from your bundle when you talk for 4 minutes and free mobile internet access. Now why wouldn't you want that?
degsyw
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degsyw,
User Rank: Light Beer
12/5/2012 | 3:11:49 PM
re: Why Vendors Can't Sell FMC
excellent points some i would add to your list are
1) all your eggs are in one basket ..... no backup for network screw up and no bargaining power
2) Not sure what US is like but in UK you would have no way of understanding you were better off, pricing confusion rains supreme customers know they get taken for ride with this ... get tied in to bundles and you are a target for being taken to the cleaners!
3) features .... aren't most of them rubbish, about to break or billed incorrectly as all the billing projects fail ;)
bobmachin
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bobmachin,
User Rank: Moderator
12/5/2012 | 3:11:48 PM
re: Why Vendors Can't Sell FMC
second most of this. I think the compelling need has never been made clear and certainly isn't being expressed in terms of FMC by the customer.

Seems to me the consumer market wants, for different purposes and at different times in their lives, a personal mobile device, and a geographically specific device (ie a home phone). These days, lots of people are growing up needing only the first, but when they buy a property and particularly when they start a family of some sort, the advantages of a phone that isn't uniquely identified with an individual become clear. There's an upswing in demand for home phones from people in their late 20s/ early 30s for this reason, however much they may be attached to their mobiles, and at that point they want divergence, not convergence.

So what's the other driver - cheap calls? Well, the home calls don't seem much cheaper than my existing homephone package, and as it's the home bit I seem to have to change, why would I? Some cheaper mobile calls would be nice, whether from home or anywhere else, but does that require a whole lot of fancy technology ? We know it doesn't..

So as a consumer I'm seeing no clear advantage and add to that I have a pretty limited choice of handsets... and I'm not sure if I really trust broadband for this... and will it work in an emergency... and... and...
optodoofus
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optodoofus,
User Rank: Light Beer
12/5/2012 | 3:11:47 PM
re: Why Vendors Can't Sell FMC
You're right; that's a great deal. Apparently, BT is being very smart about FMC/FMS. They are saving money on infrastructure and offering the consumer an incentive to participate in that savings. Alas, I do not live in the UK, and no carrier in the US is offering me that kind of a deal.

I'm not against FMC for idealogical reasons. If it will save me money (without involving too many sacrifices in quality, handset selection, etc.), then I'm all for it. But just to be clear: I want lower prices, not FMC. FMC may be the means to the end, but it is not the object of my desire.

optodoofus
jepovic
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jepovic,
User Rank: Light Beer
12/5/2012 | 3:11:44 PM
re: Why Vendors Can't Sell FMC
But how will it save money for carriers?

WLAN is an operations nightmare. Unstable, unpredictable, unsecure - virtually unmanagable on large scale.

The other option is to do like the Germans, and offer cheaper rates on the GSM base stations "at home". The advantages from a carrier perspective are enormous:
* Simple management - same as today
* No WLAN network to manage
* Same terminals (VERY important)
* Simpler billing, although some development is needed to have control of which calls are made "at home"

This service is a huge success in Germany, and LR wrote about it recently.
optodoofus
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optodoofus,
User Rank: Light Beer
12/5/2012 | 3:11:42 PM
re: Why Vendors Can't Sell FMC
Unless the mobile phone provides high quality coverage throughout the home, there is no chance that users will ditch their wired phone and move exclusively to mobile service. The options to improve indoor coverage are to build more towers, or find a way to leverage FMC. Building a new tower is an expensive proposition - when you can even get permission to put up a new tower in a residential area. I believe that leveraging the WLAN in the home via FMC can improve indoor coverage at a fraction of the cost of building the tower infrastructure required to solve the problem.

Why do you assume that the carriers need to manage the WLAN? People are installing WLANs in their homes today by the droves, and not just high tech people but all kinds of people. If you run an IPSEC client in the handset, then security is not an issue. There will be some additional operations costs, but I doubt that it will be a total nightmare. Verizon is providing wireless routers in conjunction with DSL and FIOS today. If the operations impact were unmanageable, they would already have found this out.

optodoofus
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