Fixed/mobile convergence - who wins?
When worlds collide, people get hurt. In the telecoms world, mobile operators and fixed operators have been at each others' throats for some time now, with mobile operators attempting to replace users' landlines, at home and in the office.
The convergence of fixed and mobile networks is going to intensify that conflict.
Fixed/mobile systems make an arena
Converged systems give the customer one handset that calls on both mobile networks and on indoor networks - usually a Wi-Fi network connected to the Internet. In the case of the enterprise, the indoor part of the system has to work with an IP PBX to co-operate with other office phones.
A user with one handset for both worlds will, the argument goes, only need one provider, so the stage is set for a fight to the finish between fixed and mobile providers.
Why it's tough for mobile operators
Some observers have said that convergence will favour the mobile operators. In Japan, for instance. NTT DoCoMo is selling converged phone systems to big companies. Customers use NEC dual-mode handsets, that connect via DoCoMo's mobile network outside the office. In the office, they connect over Wi-Fi to the customer's IP PBX.
The service allows mobile operator DoCoMo to sell fixed infrastructure. To some this is an example of how mobile operators can encroach on fixed territory. To others, it's just the exception that proves the rule.
"I think the NEC/DoCoMo example highlights that converged handsets will
damage the cellular business model, not promote it," says Dean Bubley of Disruptive Analysis. "I'm not aware of any other cellular operator besides DoCoMo that
would have the first clue about the PBX integration needed with the NEC
Convergence is the fixed operators' home turf, he says. They "get" PBXs, and mobile operators don't. Once the fixed operator has converged handsets, all it needs for a converged service is an MVNO agreement which uses an existing mobile operator's infrastructure. "Which is more likely?" he asks. "Fixed operators building
MVNOs, or cellular operators building PBX expertise."
Bubley's report VoWLAN Business Models: How the wireless VoIP market catalyses fixed-mobile convergence argues that the fixed operators will win.
Smartphones let convergence in
The converged phones that are under development will look very much like smartphones. Indeed, the Wi-Fi element will be yet another feature, alongside the camera and the push email client that will be used to sell smartphones (albeit with a much slower uptake - no one expects more than around five percent of phones to have Wi-Fi by 2009).
"It's a coincidence that smartphones have arrived at the same time as VoWLAN, and allowed third parties to take advantage of it," says Bubley. Mobile operators are used to owning the handset, but the infrastructure behind a converged service will favour the fixed operator.
Fixed operator BT, for instance, has used a MVNO agreement with Vodafone to come out with Fusion before any mobile operator did the reverse.
VoWLAN can disrupt mobile revenues
Apart from technical capabilities, if we look at the revenues, it is mobile operators that stand to lose most. At the moment users spend a vast amount on mobile calls inside buildings, that could be made cheaper, if less conveniently, on fixed phones.
Whoever provides converged services, their main selling point to users will be cheaper in-building calls. That means a loss of revenue to mobile operators. If they manage to get into converged services, they can accept that and offset that against new business. If not, it's just lost revenue.
Bubley thinks it's more subtle. Even if not many users take up the converged services, their very existence will force prices down: "The largest impact of VoWLAN will be its pricing leverage on tariffs, rather than outright substitution for conventional cellular calls."
Who has IP first wins
Another reason for fixed operators gaining is that they have more mature IP strategies. "VoWLAN brings VoIP into the mobile domain, several years before [mobile] carriers and their suppliers intended," says Bubley. BT's Fusion, for instance, will play heavily on BT's next generation network.
In the long term, running voice over other mobile data services could have more impact, says Bubley: "Third party VoWLAN is potentially a Trojan Horse for much more disruptive long-term forms of VoIP-over-3G."
Converged services based around using the Internet will be based on SIP, and will be more viable than those based on the cellular operators' UMA standard (renamed GAN, for generic access network, as part of the 3GPP standard for 3G services). UMA/GAN merely uses unlicensed networks for the coverage.
After a short head start, UMA will be beaten by SIP, says Bubley. He predicts 30 million dual-mode handsets by 2009, but only 6.7 million of those will be UMA.
"By the time cellular operators get around to rolling out IMS [the IP multimedia subsystem] and then 3GPP R6 and R7, it may be too late to stem the flow of competing 'native VoIP' solutions," says Bubley. "By adopting SIP-based VoWLAN now, they have a chance to play in, and properly direct the future of the mobile marketplace as it collides with the unstoppable world of IP."
There's some doubt whether they will actually take that chance.