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10/2/2007
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Merging Wired And Wireless Technologies Will Generate Billions In Revenue

Fixed-mobile convergence will generate more than $35 billion in revenue for service providers and hardware vendors, according to a new study from Insight Research.

In the next five years, fixed-mobile convergence will generate more than $35 billion in revenue for service providers and hardware vendors, according to a new study from Insight Research.

Fixed-mobile convergence, or FMC, typically refers to the integration of wireline and wireless technologies. Mobile devices that use the technology can make mobile calls using cellular networks, use Wi-Fi hotspots or wireless local area networks (WLANs) for Internet access, and make voice over IP calls.

The underlying technology for fixed-mobile convergence is the Internet Protocol, which enables new services like peer-to-peer communications on mobile devices.

Insight Research's study, called "Fixed Mobile Convergence: Single Phone Solutions for Wireline and Wireless, 2007-2012," found that consumer demand is driving FMC sales, while businesses are watching from the sidelines. Businesses aren't adopting FMC as quickly because wireline service providers and cellular providers aren't promoting the technology due to the lack of economic incentive.

Telecom providers are concerned that customers with dual-mode devices -- those that use both cellular and Wi-Fi technology -- would use Wi-Fi networks to make free or cheap phone calls and bypass their more expensive cellular phone services. It's a lot more profitable for a telecom provider to charge for a cellular call by the minute, as opposed to allowing VoIP calls.

"FMC represents another telecommunications area where the U.S. is trailing developments in Europe and Asia. Europe was first to adopt FMC solutions, and it's forecast to continue investing in the technology. In the U.S., however, the largest incumbents are replacing declining access line revenue with revenue derived from the sale of both wireless and broadband services, so there's little incentive at present to push FMC to consumers," said Insight Research president Robert Rosenberg, in a statement.

Many consumers are substituting mobile phones for wired phones and making their cellular service their only telephone service, the study found. The trend has had a negative effect on local and long distance telecom providers, causing a steady decline in customers and revenue.

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