Operator Strategies for Fixed-to-Mobile Convergence in Western Europe

Fixed-mobile Convergence Gaining Momentum in the European Telecommunications Market

With the focus shifting from access technologies to applications and services, fixed-mobile convergence (FMC) is gaining momentum in the European telecommunications market. As such, changes are becoming apparent across the value chain-from the end user to the core network infrastructure-and telecommunication carriers and service providers will need effective strategies to exploit the opportunities provided by FMC. The penetration of the wireless local area network (WLAN) technology and its integration with broadband and cellular data, coupled with the development of voice over WLAN products and solutions, is expected to enhance the scope of FMC. The implementation of IP multimedia subsystem (IMS), which enables the use of a single application platform, is likely to help in reducing operational and capital expenses. This is expected to prompt carriers to develop new applications and services due to lower investment requirements. Such factors are anticipated to change the vertically structured, access technologies-based telecommunications market to a horizontal one that emphasises applications and services.

This Frost & Sullivan research service examines the European telecommunications market, segmenting it into fixed, mobile and integrated carriers. It also discusses the various market trends and opportunities while providing in-depth analysis of market share, forecasts, market drivers and restraints, fixed-mobile convergence operator strategies and revenues. Strategic recommendations offered in this study enable companies to align their positioning strategies to benefit from the changing market conditions and obtain maximum return on investment.

Clear-cut Strategies at Application, Service, Network and Device Levels to Combat Uncertainties in the Telecommunications Market

Increasing competition, both between and within the fixed and mobile industries, has spurred telecom service providers’ efforts to offer converged services and has encouraged fixed-to-mobile substitution strategies. "Uncertainties in the market are driven by the development of various technologies especially voice-over-IP (VoIP), WLAN, the emergence of worldwide interoperability for microwave access (WiMAX) (and similar) technologies, dual mode handsets as well as higher-speed cellular capabilities", observes the analyst. However, adopting clear-cut strategies at various levels is likely to provide powerful new ways for operators to differentiate their services and thereby, increase end-user loyalty, decrease costs and attract new customers.

Application-level strategies are expected to become increasingly important with the deployment and penetration of IMS, which can enable carriers to develop new applications. Providing service bundles is also likely to enable cross-selling, which can help reduce costs associated with customer acquisition. The deployment of IMS can also help break down barriers between fixed and mobile networks. This is likely to lead to the integration of core networks and significantly reduce capital and operational expenditure (CAPEX and OPEX). Integrated devices are expected to remain the focus of marketing efforts due to the emerging trend of several users doing away with their fixed lines. However, the market for integrated devices is still at an early stage due to the high costs associated with such devices.

FMC Trends Drive Integrated and Non-integrated Carriers’ Revenues

Fixed carriers (such as cable operators, Internet/digital subscriber line (DSL) service providers, fixed network operators and wireless hotspot network operators/VoIP service providers) are likely to benefit from offering converged services due to their well-developed support systems. Their understanding of enterprise requirements is also likely to induce enterprise mobile data solutions, which holds great potential. Integrated carrier operators that have their own cellular and fixed networks are also likely to gain from the integration of business functions such as customer care and network operations.

"Mobile carriers are not likely to be left behind either and most mobile operators are moving into converged services by integrating WLAN with their cellular networks", says the analyst. "Mobile carriers that partner with fixed carriers to offer converged solutions will do well to ensure that the new services do not compete against their existing ones." Despite the FMC trend being a gradual one, carriers that act early and adopt strategies to improve customer retention are likely to gain from FMC.