Key issues, challenges and opportunities for (FM)C Mark Newman Mark.newman@informa.com Chief Research Officer Informa Telecoms & Media June 26, 2008
Agenda 1. FMC now and five years ago 2. Convergence fragmentation 3. WiFi vs femtocells? 4. Key issues and concluding remarks
1. FMC now and three years ago A focus on voice? A strategy driven by fixed operators to protect their own business and slow the decline in PSTN lines and revenues. Strategy was Network- and Operator-driven with an insufficient focus on value-proposition to the end-users. The education challenge how to bring together personal and communal services in a single package. Lack of support from handset manufacturers IMS and UMA Home zones
1. FMC now and three years ago A focus on all services A strategy driven by the desire to make Internet and IP applications available on all devices and networks Convergence rather than FMC A fragmented technology landscape IMS, UMA, SIP, VCC, femtocell
2. Convergence fragmentation Industry Convergence Signals from the Industry. The Road to Full Convergence, FMCA thought leadership Paper, May 2008 BT and Sony partner to bring text messaging, voice and video calls to the PSP gaming console. Telecom operators (eg Telecom Italia, Deutsche Telekom, Optus) are offering successful TV services over fixed or mobile Swisscom s OGO brings Instant Messaging Mobile Intel commits to embedding personal computing technology into mobile devices for true mobile Internet Microsoft seeks a significant share of the advertising market CBS is launching a mobile LBS service (Loopt) Apple has introduced the much-hyped iphone Google is introducing its mobile platform, Android Nokia is taking over Navtech
2. Convergence fragmentation Industry Convergence Signals from the Industry. The Road to Full Convergence, FMCA thought leadership Paper, May 2008 Convergence of consumer electronics devices and mobile phones IPTV and mobile TV Accessing internet services on mobile phones and the emergence of MIDs Mobile advertising Location-based services Incorporating enterprise applications into mobile devices Offering integrated fixed and mobile voice services Integration of fixed and mobile networks
Are femtocells on a collision course with WiFi- based services and business models?
3. Femtocells; where are we on the hype curve? The bull case Reduction of operator Capex Solving the in-building coverage problem Economies of scale driving down price points Smartphones (iphone, N95) prove the business case for in-home mobile browsing Overcomes the problem of limited handset availabilities A solution to WiFi interference
3. Femtocells; where are we on the hype curve? The bear case Where s the customer proposition? Can operators really generate capex savings? Operators will need to heavily subsidise femtocells can they really afford higher SACs? Operators have already committed to WiFi Is mobile phone browsing at home really a mass-market trend?
4. Key issues and concluding remarks 1. The interconnection of access networks is the key to success in the uniting space. The Full Road to Convergence, FMCA thought leadership paper Can operators agree to interconnection themselves or do they need regulators? Will regulators want to regulate new services?
4. Key issues and concluding remarks 2. Are we underestimating cost and complexity? In the long term providers must meet the customers need to be always in touch with a wide range of integrated devices that unite all of their services. Interconnect is crucial to create economies of scale for providing services over mixed infrastructures. The Full Road to Convergence, FMCA thought leadership paper
4. Key issues and concluding remarks 3. Does fixed and mobile (personal) service bundling work?
4. Key issues and concluding remarks 3. Does fixed and mobile (personal) service bundling work? In April, Telekom Austria moved to take advantage of this demand by launching a fixed/mobile-broadband bundle called AonFlex, which enables users to access DSL at home via Wi-Fi and HSPA elsewhere via a USB dongle. The incumbent hopes the product will increase the ARPU of its existing fixed-line customers. "It is more an upsell to our existing [DSL] broadband base, because normally they are happy with the [fixed-line] access, but they might need some mobility," says Hannes Ametsreiter, chief marketing officer of Telekom Austria. He says it is too early to say whether AonFlex has been a success, but notes that consumers have taken to other bundles that pitch mobile as a nice-to-have add-on rather than a replacement for their existing mobile services. Telekom Austria sold 100,000 SIM cards between November and mid-january as part of its KombiPaket bundles of fixed-line telephony, DSL and up to three SIM cards. Vodafone Italy has put fixed/mobile-broadband bundling at the heart of its plans to be a "total communications provider", following its late-2007 acquisition of fixed-line provider Tele2 Italy. This summer, Vodafone plans to launch a product called Vodafone Station, which will enable users to access DSL at home via a specially designed home gateway and HSPA elsewhere via a USB dongle. BT has taken the most unusual approach to fixed/mobile -broadband bundling. The UK incumbent last month launched BT Total Broadband Anywhere, which offers BlackBerry-like handsets for browsing the web and sending e-mail via BT-affiliated Wi-Fi hotspots or the GPRS network of its MVNO partner, Vodafone UK.
4. Key issues and concluding remarks 3. Does fixed and mobile (personal) service bundling work? Personal Home Hybrid Mobile Telephony Quad play Mobile bb Broadband Mobile bb + Broadband Mobile + Mobile bb Pay-TV Five-play Triple Play Postpaid & prepaid Postpaid Postpaid? Mobile retailers Fixed' retailers + tel/online Mobile + fixed retailers Plug + play? Home installation Home installation High churn Low churn Low churn Device choices Devices limited Devices limited? femtocells? femtocells?
Many thanks Mark Newman Chief Research Officer Informa Telecoms & Media + 44 20 7017 4263 mark.newman@informa.com www.informatm.com