Fixed Mobile Convergence, Episode Two : The Human Factor

In Episode One in this series of posts I outlined my thoughts on what Fixed Mobile Convergence is and how it defines the future of communications. FMC is occupying the minds (and development cycles) of most of the worlds largest telecoms companies. However, it is not such a hot topic amongst consumers which raises an interesting question; will consumers really be that bothered about FMC ?

Recent years have seen consumers demanding higher functionality and improved mobility from modern mobile communications and entertainment devices. The telecoms industry has been quick to respond with devices such as the Blackberry Pearl and the recently released (and very funky) Apple iPhone. These are the kind of devices which consumers seem keen to spend their hard earned money on. At the same time few aspire to buy the latest fixed line phone.

Increased dependence on (and use of) "traditional" 2G mobile devices has inevitably led to decreased calling costs which has, in turn, led to increased usage. This virtuous cycle of increasing mobile usage has benefited mobile operators with increasing revenues over the last few years.

Indeed, mobile phone usage has increased to such an extent that it is threatening FMC deployment before it has even begun. Many consumers are now choosing to use a single mobile/cellular device for all their voice calls, whether they are travelling or at home. This phenomenon, referred to Fixed-to-Mobile Substitution (FMS), is now a significant feature of mobile usage in Europe. Indeed some have estimated that as many as 12% of all EU household are now "mobile only" although in Finland the figure may be as high as 29%.

The success of mobile phones can be attributed, in the main, to two factors; cost and convenience. Mobile calling costs have tumbled over the last few years (due to a number of factors including competition) to such an extent that the differential between the cost of fixed line and mobile calls has been eroded enormously; mobile is now seen as being cost effective for everyday calls. Also, mobile devices are seen as being convenient and feature rich. Consumers are now used to carrying a single, truly mobile device containing their phone book and address book which also acts as a digital camera and an MP3 player.

Of course, the last few years have seen consumers being offered an alternative to the traditional mobile phone in the form of 3G. Response to the introduction of 3G has varied greatly throughout the world. In Japan it has become almost the standard for mobile communication devices while elsewhere acceptance has been more gradual. In the UK, 3G has been seen as being more expensive whilst offering poorer coverage and less attractive handsets. However, the gradual growth of 3G is still a threat to the future of FMC services since, in some ways, the two offerings overlap (e.g. both offer advanced services such as video streaming).

All in all, our growing dependence on (especially 2G) mobile devices has heralded their move from gadget to fashion item; a sure indicator that consumers are not willing to give up their mobile phones easily.

For FMC services and handsets to succeed they need to mimic the appeal of mobile only devices whilst offering other benefits to counter the dominance of traditional mobile phones. In fact FMC type services and handsets provide advantages which not only mirror those of mobile communications but, in some ways, better them. For example, future FMC solutions may offer:

  • Reduced call cost: calls made via a fixed line (WLAN) can be (effectively) free
  • Convenience: converged handsets will provide similar features to modern mobile devices
  • Advanced services: FMC devices based on SIP/IMS will have the capability of providing rich multimedia based services (such as video streaming, chat and web browsing)
  • Improved coverage: In certain cases WiFi coverage in the home will provide better signal coverage than mobile transmitters
  • Simplified "single-billing"
  • Presence (as outlined in my recent blog entry)

It seems clear that, as Fixed Mobile Convergence products and services roll out into the mainstream, the main inhibitor to their growth is likely to be the mobile phones we all currently use from day to day. The question is; will converged services and devices be available before the dominance of 2G and 3G mobile becomes unassailable and, when they do arrive, can they offer enough to become the new fashion ?

3 Comments

  1. ericsson phone sony w600i

    Yes, you are absolutely correct and almost every gadget now has a lot of features can offer there is this watch with MP3 and phone feature, the phone is now an all in one gadget. What’s next? A Phone with TV and DVD player? wow! That’s great… but I am waiting for that Apple iPhone to be available here in Asia.

  2. Art Rosenberg, The Unified-View

    Paul,
    Much of what you say is correct and intuitively obvious, but you failed to mention the real differentiator for consumer “fixed” telephony and wirless mobility. The former is typically a “residence” number that is typically shared by residence members, while the mobile devices belong to individual end users. The benefit for mobile device users is “personalization” of form factors, features, functions, and coming presence management. That doesn’t work well at all with a wired phones that may be shared by multiple individuals.
    Respectfully,
    Art Rosenberg
    The Unified-View

  3. Paul Tingey

    Art,
    You raise a very good point. Mobile devices have become (and will continue to evolve as) personalised accessories which reflect our individual character (in terms of likes & dislikes, fashion choices, etc). This is not true of the traditional home telephone.
    This growing association of communication devices with individuals rather than homes does raise the prospect of children being “issued” with their own personal mobile device and “presence identity” almost from birth. Not a particularly inviting prospect in my opinion.
    Many thanks
    Paul

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