Abstract
1 OBJECTIVES OF PROGRAM
Dittberner Associates has initiated a new program aimed at providing its
clients insights into the developments related to fixed-mobile convergence
(FMC), and their implications for the telecommunications industry. Although
FMC is not a new concept - it was talked about as soon as cellular mobile
telephony took off in earnest in the mid 90's - it has become in the past 18
months the subject of many discussions by all industry participants. Three
major related industry developments are stimulating this debate, as well as
making it quite relevant:
- The pervasive ongoing migration to NGN technology in all segments of the
network, including in the access and premises networks, and the concomitant
development of IP-based services by both wireline ILECs (especially Class 5
and Class 4 replacement), and wireless carriers (3G), result in increasingly
overlapping voice, data, and video services. NGN technology also makes
technically possible the integration of critical parts of the networks (e.g.
IMS), and creates the corresponding financial incentives (potential reduction
of Opex and Capex).
- The increasing competition between all types of carriers: No longer are
ILECs competing only with other ILECs or CLECs. No longer are cellular mobile
operators just competing between themselves. Mobile substitution (to fixed
wireline) is becoming a reality if only through pricing schemes; CATV
operators are resolutely introducing sophisticated voice and
- data services; ISPs are introducing voice services to complement Internet
access; and broadband access technologies, both wireline and wireless, are
leveling the field. Furthermore, the MVNO model offers wireline operators the
possibility of entering partnerships with mobile network operators, thus
providing them the opportunity to offerconverged services.
- The development of UMA (Unlicensed Mobile Access) and IMS (IP Multimedia
Subsystem) technologies and standards has largely contributed to the sudden
renewed enthusiasm for FMC in the telecommunications industry.
- Whether FMC itself will be a telecommunications industry revolution, as
some enthusiastic vendors and consultants contend, or one aspect of the
ongoing migration of all telecommunications to packet technology, and IP
service platforms (e.g. IMS) with relatively limited marketing impact (as
compared to broadband access, or IP video for example) remains to be seen. The
answer depends to a certain extent on how one defines FMC. Although there are
conceptually potential benefits to users (e.g. a single handset, cheaper and
higher quality cordless connections at home, one number, one voicemail box,
one bill, etc.), it appears that the current interest in FMC is not presently
driven by a demonstrated market demand.
- Dittberner Associates' FMC program will address all aspects of FMC. This
report encompasses the strategic and business aspects of FMC, primarily from
an incumbent carrier's standpoint. A separate report addresses the technical
aspects and focuses on vendors' strategies.
1.1 INITIAL STUDY
The objectives of this initial study are to answer the following questions
regarding the convergence of fixed and mobile communications (FMC):
- How and to what extent FMC could impact carrier's competitiveness, market
position and financial performance?
- Will this impact differ depending on whether a carrier has strong market
positions in both fixed and mobile telephony?
- How will mobile-only carriers compete against full service carriers
offering FMC services?
- Does FMC correspond to a real market demand, or is it primarily a strategy
for carriers to add more value and fight new competition, or both?
- Is FMC primarily a strategy to integrate separate network infrastructures
("siloed networks"), and improve carriers' operational performance (Opex,
Capex, time to market, etc.)?
- Will carriers be able to derive sizable incremental revenue from services
associated with FMC?
- Which carriers are best positioned to take advantage of FMC opportunities?
- In which countries FMC is likely to take off first?
- What is the current status of FMC deployments? What FMC solutions/services
have already been implemented?
This first report comprises three parts:
1. An analysis of the strategic framework pertaining to FMC, including:
- Development trends of fixed, and mobile communications,
- Major carriers' involvement and market positions in fixed and mobile
telephony, and potential impact of FMC on their business,
- Factors related to the marketing of FMC services,
2. A status report on the FMC activities and initiatives of 21 major networks
operators around the world. Each case study presents the carrier's involvement
in wireline and wireless mobile network services, and its current FMC/IMS
activities, and corresponding development plans (trials/deployments,
alliances, etc.).
3. A carrier business case, related to a large ILEC with a major cellular
mobile telephony business, covering the impact of incremental revenue,
operating expenses and capital expenditure changes on income, cash flow and
ROI. The business case uses a model, which is part of the report, allowing
users to test their own assumptions, and develop extensive sensitivity
analyses.
1.2 SUBSEQUENT STUDIES: MONITORING OF FMC DEVELOPMENTS
This report includes the results of the first comprehensive analysis conducted
by Dittberner Associates on the convergence of fixed and mobile
communications. This phenomenon (FMC) is currently embryonic. Much uncertainty
surrounds the pace and scope of its development, and its significance for
telecommunications operators' competitive position and financial performance.
Consequently, the opportunity that FMC may represent for network systems
vendors is still very much a big question mark.
Dittberner Associates will continue monitoring closely all developments
(technology, carriers' plans and deployments, financial parameters) related to
FMC, and publish periodic updates of this report, incorporating the latest
developments and findings. These updates will focus on refining the business
cases presented in this report, possibly developing alternative business cases
incorporating new developments and parameters, and on the latest vendors and
carriers' initiatives.
1.3 SCOPE OF ANALYSES
1.3.1 Countries
The statistical analyses in this project are based on the 31 countries that
had more than 10 million cellular mobile subscribers at the end of 2004. These
countries, listed below, represented at the end of 2005 nearly 87% of the
world's total estimated number of mobile subscribers (approximately 2
billion). These 31 countries also accounted for 86.7% of the world's total
main access lines at the end of 2004. The analyses based on this sample of
countries, are therefore quite representative of the entire world
telecommunications industry.
Americas
- Argentina
- Brazil
- Canada
- Colombia
- Mexico
- United States
Europe
- Czech Republic
- France
- Germany
- Greece
- Italy
- Netherlands
- Poland
- Portugal
- Romania
- Russia
- Spain
- Ukraine
- United Kingdom
Asia, Pacific & Africa
- Australia
- China
- India
- Indonesia
- Japan
- Korea
- Malaysia
- Philippines
- Taiwan
- Thailand
- Turkey
- South Africa
Table of Contents
1 OBJECTIVES OF PROGRAM
- 1.1 INITIAL STUDY
- 1.2 SUBSEQUENT STUDIES: MONITORING OF FMC DEVELOPMENTS
- 1.3 SCOPE OF ANALYSES
- 1.3.1 Countries
- 1.3.2 Operators
2 STRATEGIC FRAMEWORK FOR FMC
- 2.1 TRENDS IN FIXED AND MOBILE COMMUNICATIONS
- 2.1.1 Introduction
- 2.1.2 Main access lines
- 2.1.2.1 Wireline telephony revenue trends
- 2.1.3 Evolution of cellular mobile telephony
- 2.1.3.1 Mobile telephony subscribers
- 2.1.3.2 Mobile telephony revenue trends
- 2.1.4 Comparison fixed vs mobile
- 2.1.4.1 Main access lines vs mobile subscribers
- 2.1.4.2 Fixed-mobile revenue comparison
- 2.1.5 Conclusions
- 2.2 MAJOR CARRIERS' STRATEGIC POSITION
- 2.2.1 Impact of carriers' present position
- 2.2.2 Major carriers' position
- 2.2.2.1 Involvement of major ILECs in cellular mobile business
- 2.2.2.2 Major mobile carriers without wireline carriers' affiliations
- 2.2.3 Summary and comments
- 2.3 MARKETING
- 2.3.1 Introduction
- 2.3.2 Examples of existing FMC services/solutions
- 2.3.3 Potential FMC services
- 2.3.3.1 Services for which convergence could make sense
- 2.3.4 FMC services applications and user segments
- 2.3.4.1 CRM (Customer Relationship Management)
- 2.3.4.2 Voice services
- 2.3.4.3 Broadband Internet access
- 2.3.4.4 IP-VPN
- 2.3.4.5 Video broadcast and VoD
- 2.3.4.6 Major residential FMC services
- 2.3.4.7 Major corporate/business FMC services
- 2.3.5 Carriers' potential incremental revenues
- 2.3.5.1 Generic FMC strategic alternatives for fixed and mobile
carriers
- 2.3.5.2 Incremental revenue potential
3 CARRIERS' FMC DEVELOPMENT ACTIVITIES
- 3.1 AT&T (SBC COMMUNICATIONS)
- 3.1.1 Carrier synopsis
- 3.1.2 Revenue trends
- 3.1.3 FMC Activities
- 3.1.3.1 FMC services currently offered (former SBC)
- 3.1.3.2 FMC service development plans
- 3.1.3.3 (SBC) AT&T's IMS initiatives
- 3.1.3.4 Concurrent developments
- 3.2 BELLSOUTH
- 3.2.1 Carrier synopsis
- 3.2.2 Revenue trends
- 3.2.3 BellSouth's FMC activities
- 3.2.3.1 FMC services development plans
- 3.2.3.2 BellSouth's IMS initiatives
- 3.2.3.3 Concurrent developments
- 3.3 BRASIL TELECOM
- 3.3.1 Carrier synopsis
- 3.3.2 Revenue trends
- 3.3.3 Brazil Telecom's FMC activities
- 3.3.3.1 FMC services currently provided
- 3.3.3.2 FMC service development plans
- 3.3.3.3 Brasil Telcom's IMS initiatives
- 3.3.3.4 Concurrent developments
- 3.4 BRITISH TELECOM
- 3.4.1 Carrier synopsis
- 3.4.2 Revenue trends
- 3.4.3 British Telecom's FMC activities
- 3.4.3.1 FMC services currently provided
- 3.4.3.2 FMC service development plans
- 3.4.3.3 British Telecom's IMS initiatives
- 3.4.3.4 Concurrent developments
- 3.5 CHINA UNICOM
- 3.5.1 Carrier synopsis
- 3.5.2 Revenue trends
- 3.5.3 China Unicom's FMC activities
- 3.5.3.1 FMC service development plans
- 3.5.3.2 China Unicom's IMS initiatives
- 3.5.3.3 Concurrent developments
- 3.6 CINGULAR WIRELESS
- 3.6.1 Carrier synopsis
- 3.6.2 Revenue trends
- 3.6.3 FMC activities
- 3.6.3.1 FMC services currently provided
- 3.6.3.2 FMC service development plans
- 3.6.3.3 Cingular's IMS initiatives
- 3.6.3.4 Concurrent developments
- 3.7 DEUTSCHE TELEKOM
- 3.7.1 Carrier synopsis
- 3.7.2 Revenue trends
- 3.7.3 FMC activities
- 3.7.3.1 FMC services
- 3.7.3.2 Deutsche Telekom's IMS initiatives
- 3.7.3.3 Concurrent developments
- 3.8 FRANCE TELECOM
- 3.8.1 Carrier synopsis
- 3.8.2 Revenue trends
- 3.8.3 FMC activities
- 3.8.3.1 FMC services currently provided
- 3.8.3.2 FMC service development plans
- 3.8.3.3 France Telecom's IMS initiatives
- 3.8.3.4 Concurrent developments
- 3.9 KPN
- 3.9.1 Carrier synopsis
- 3.9.2 Revenue trends
- 3.9.3 FMC activities
- 3.9.3.1 FMC services currently provided
- 3.9.3.2 FMC service development plans
- 3.9.3.3 KPN's IMS initiatives
- 3.9.3.4 Concurrent developments
- 3.10 KT CORPORATION
- 3.10.1 Carrier synopsis
- 3.10.2 Revenue trends
- 3.10.3 FMC activities
- 3.10.3.1 FMC services currently provided
- 3.10.3.2 FMC service deployment plans
- 3.10.3.3 KT's NGN/IMS initiatives
- 3.10.3.4 Concurrent developments
- 3.11 NTT CORPORATION
- 3.11.1 Carrier synopsis
- 3.11.2 Revenue trends
- 3.11.3 FMC activities
- 3.11.3.1 FMC services currently provided
- 3.11.3.2 FMC service development plans
- 3.11.3.3 NTT's IMS initiatives
- 3.11.3.4 Concurrent developments
- 3.12 ROGER COMMUNICATIONS
- 3.12.1 Carrier synopsis
- 3.12.2 Revenue trends
- 3.12.3 FMC activities
- 3.12.3.1 FMC services currently provided
- 3.12.3.2 FMC service development plans
- 3.12.3.3 Rogers's IMS initiatives
- 3.12.3.4 Concurrent developments
- 3.13 SPRINT NEXTEL
- 3.13.1 Carrier synopsis
- 3.13.2 Revenue trends
- 3.13.3 FMC activities
- 3.13.3.1 FMC services currently provided
- 3.13.3.2 FMC service development plans
- 3.13.3.3 Sprint's IMS initiatives
- 3.13.3.4 Concurrent developments
- 3.14 SWISSCOM
- 3.14.1 Carrier synopsis
- 3.14.2 Revenue trends
- 3.14.3 FMC activities
- 3.14.3.1 FMC services currently provided
- 3.14.3.2 FMC services deployment plans
- 3.14.3.3 Swisscom's IMS initiatives
- 3.14.3.4 Concurrent developments
- 3.15 TDC
- 3.15.1 Carrier synopsis
- 3.15.2 Revenue trends
- 3.15.3 FMC activities
- 3.15.3.1 FMC services currently provided
- 3.15.3.2 FMC service deployment plans
- 3.15.3.3 TDC's IMS initiatives
- 3.16 TELECOM ITALIA
- 3.16.1 Carrier synopsis
- 3.16.2 Revenue trends
- 3.16.3 FMC activities
- 3.16.3.1 FMC service development plans
- 3.16.3.2 Telecom Italia's IMS initiatives
- 3.16.3.3 Concurrent developments
- 3.17 TELEFONICA
- 3.17.1 Carrier synopsis
- 3.17.2 Revenue trends
- 3.17.3 FMC activities
- 3.17.3.1 FMC services development plans
- 3.17.3.2 Telefonica's IMS initiatives
- 3.17.3.3 Concurrent developments
- 3.18 TELIASONERA
- 3.18.1 Carrier synopsis
- 3.18.2 Revenue trends
- 3.18.3 FMC activities
- 3.18.3.1 FMC services development plans
- 3.18.3.2 TeliaSonera's IMS's initiatives
- 3.18.3.3 Concurrent developments
- 3.19 TELKOM SOUTH AFRICA
- 3.19.1 Carrier synopsis
- 3.19.2 Revenue trends
- 3.19.3 FMC activities
- 3.19.3.1 FMC services currently provided
- 3.19.3.2 Telkom's IMS initiatives
- 3.19.3.3 Concurrent developments - Telkom
- 3.19.3.4 Concurrent developments - Vodacom
- 3.20 VERIZON
- 3.20.1 Carrier synopsis
- 3.20.2 Revenue trends
- 3.20.3 FMC activities
- 3.20.3.1 FMC services currently provided
- 3.20.3.2 Short term FMC service development plans
- 3.20.3.3 Verizon's IMS initiatives
- 3.21 VODAPHONE
- 3.21.1 Carrier synopsis
- 3.21.2 Revenue trends
- 3.21.3 FMC activities
- 3.21.3.1 FMC services currently provided
- 3.21.3.2 FMC service development plans
- 3.21.3.3 Vodafone's IMS initiatives
- 3.21.3.4 Concurrent developments
- 3.22 CASE STUDIES SUMMARY
- 3.22.1 Carriers' networks
- 3.22.2 IMS initiatives
- 3.22.3 Dual mode terminals
- 3.22.4 Other FMC services
- 3.22.5 Fixed mobile substitution
FMC BUSINESS CASE
4.1 SCOPE OF FMC BUSINESS CASE
