Fixed Mobile Convergence: Single Phone Solutions for Wireless, Wireline, and VoIP Convergence 2005-2010
Report
Thus far in the US the substitution effect has been one way: many consumers are substituting a wireless phone for wired phone and making their wireless service their only telephone service.
Thus far in the US the substitution effect has been one way: many consumers are substituting a wireless phone for wired phone and making their wireless service their only telephone service. For local and long distance companies this trend has been disastrous?resulting in a steady decline in the customer base and revenue.
In this study, Insight examines the potential impact that the single phone with fixed and mobile capability will have on the stakeholders: local wireline carriers, long distance providers, broadband ISPs, wireless carriers, and handset vendors. This report details the technologies and marketing enablers that each stake holder segment must address to achieve a successful convergence strategy. Based upon our analysis of current international wireless-wireline convergence initiatives, Insight details how the various national communications environments are producing different models for success.
The study concludes with a forecast of the market for convergence products in the US and internationally, assessing which strategies are presently the most successful.
1.1 Development of a Fixed Mobile Convergence Market
The confluence of technological and market forces reshaping the US telecommunications scene today calls into question the future of the fixed line telephone, a fixture in 95 percent of US homes and businesses. In this study, INSIGHT examines fixed-mobile convergence (FMC), and fixed-mobile substitution, the tendency of telecommunications users to add wireless capability to landlines phones or, in the extreme case, drop their landline service entirely in favor of a cellular phone.
Telecommunications service and usage patterns have been shifting for some time as an increasing percentage of residential and business users switch voice calls to mobile networks: the number of fixed lines has been dropping at nearly a three percent rate for the past several years, even as adoption of mobile phones increases. Nearly 65 percent of Americans, or 195 million people, are expected to be mobile phone subscribers by the close of 2005.
The underlying dynamic of the shift in call volume from fixed to mobile is well documented. As users become more used to the convenience of cellular, long distance and local usage is shifting from wireline to cellular. The average wireline residential toll minutes of use (MOUs) have been dropping at a compounded rate of 15 percent since 2000, while wireless interstate MOUs per user grew at a compounded rate of nearly 40 percent during the same period. According to one FCC study, on the wireless side, the percentage of interstate residential minutes has increased from 16 percent to 26 percent of all wireless minutes. These changes in calling patterns are being reflected in ILEC line losses?a trend likely to continue.
Given such a dynamic, are Americans going to entirely abandon their fixed line phone for cellular calling? Can cellular carriers, using voice over the Internet protocol (VoIP) and leveraging wireless LAN technology, displace PBX manufacturers in the enterprise market? The further growth of wireless and its ability to displace fixed line calling will be influenced by several factor including:
? the propensity of remaining users to drop their wireline access lines completely; and
? the supply-side tactics of wireless and wireline carriers.
According to our analysis of most recent government data, the demographic information regarding those who have wireless-only service indicates that young, single people living in urban areas are those most likely to have cut the cord. The sample data suggests that 51.6 percent of households have both landline and cellular service, six percent of households have only cell phone service, and...
Thus far in the US the substitution effect has been one way: many consumers are substituting a wireless phone for wired phone and making their wireless service their only telephone service.