Can MVNOs help FMC Succeed?

6 Comments

Venture capital has poured hundreds of millions of dollars into companies building equipment to enable FMC (fixed-to-mobile convergence) products and services. To date, the cellular operator market opportunity has languished but the tide may be changing if the MVNOs take advantage of the technology.

FMC, among other things, allows your dual-mode mobile phone to seamlessly transfer a call between a cellular network and a Wi-Fi network using VoIP. The FMC advantages are that you get to use your dual-mode mobile phone in places where Wi-Fi coverage may be better than your provider’s cellular coverage, such as your home or office (although supporting VoIP over Wi-Fi will have its technical challenges as well).

The Wi-Fi coverage may encourage you to stay with your current cellular operator and that, of course, is also the main advantage to them. Or is it? Truthfully, I’m not convinced that the cellular operators really want to give the consumers more connectivity choices from their mobile phones. Once you’ve made the leap off their cellular infrastructure using onto VoIP over WiFi, it’s a pretty short hop to Skype.

So, if the cellular operators aren’t pushing it because they are worried about cannibalizing their own revenues, who really wants FMC? It appears to be the MVNOs.

Using FMC they can lure their customers off the cellular operators’ infrastructure, where their operating margins are razor-thin, and onto their own VoIP-enabled infrastructure. An MVNO can offer a wealth of profitable services without relying on the cellular networks. As an example, Embarq, an MVNO reselling Sprint’s cellular service, is offering some services based on FMC today. And T-Mobile appears to be readying an FMC-based service for deployment soon as well.

So, do the venture investments into FMC begin to pay off over the next year or so? If enough MVNOs can survive and not suffer ESPN Mobile’s fate, then maybe there will be a decent return on the investments. Personally, I’m getting ready to check out the latest dual-mode mobile phones and the MVNO service plans. Given the coverage at my house, my cellular operator is now officially on notice.

6 Comments

Noah Bloom

Mike at Techdirt seemed to grasp the failure of a content MVNO ESPN mobile (http://news.techdirt.com/news/wireless/article/6901): “the key reason people buy mobile phone service is to communicate, not to get sports info.” So instead of focusing on the content MVNO, what about the MVNO that is improving how people can communicate in ways that carriers are still lagging, for example those that are deploying better FMC and roaming services. These are two critical areas in which consumers are still not offered what is technologically possible, and it will probably be innovative MVNOs leading the charge. The convergence MVNO can deliver a seamless user experience over WiFi and GSM, maybe even linking their existing VoIP business with an MVNO play, bridging IP-PBX to mobile devices, etc. or a better roaming solution (especially Europe), with multiple agreements, virtual numbers, and cheaper roaming.

Mari

Two things worth mentioning. First, cellular carriers do get the benefit from FMC of being able to offload traffic from subscribers who are using all-you-can-eat price plans already.

Second, cellular carriers without wireline networks (i.e. T-Mobile and MVNOs in the US) get the benefit of being able to offer home phone service with FMC, whether or not they choose to implement features like seamless call transfer between networks. More on that topic from Motorola’s perspective here: http://connectedhome2go.com/2007/04/09/why-wireless-carriers-like-convergence/

fo.unta.in

I doubt if this will be of any use. VoIP call qualities are far from acceptable for any important communication, and these days most official communication is critical. So ppl are going to look at this, and say oh i can spend 15 more bucks and get cellfone quality let me go for it.

that leaves us with the myspace crowd. but when did they worry about bills anyway?

Ol' Yeller

The US carriers have done everything possible to delay and block the entry of dual-mode devices. They will say they’re interested, studying, trialing, etc., but in the end nothing happens and it’s because they don’t WANT anything to happen! Their voice ARPU is already under massive pressure, and once FMC catches the price floor will free-fall towards zero.

Jesse Kopelman

MVNO + FMC is a natural fit. The problem is that FMC is device driven. Right now there is good GSM+FMC device availability, but the big name MVNO players are all CDMA! Whoops . . . I agree with Allan that the big question is whether the MVNO can hold on long enough for the devices they need to become available. Of course, this may end up being a USA only issue. European MVNO which all use GSM have no excuse for not going FMC ASAP.

Cory

It’s not really a question of “Will FMC succeed?”, but rather “When will FMC succeed?”

It is the natural evolution of current communications technology, and could be easily applied to wireless data protocols other than traditional 802.11X.

In my estimation, it is not a lack of proven technology and practical know how that has prevented FMC from grabbing hold, but rather the horsetrading amongst network provider encumbents that stalls the adoption of FMC.

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