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Fixed Mobile Convergence: Single Phone Solutions for Wireless, Wireline, and VoIP Convergence 2005-2010
a market research report
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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.
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Report Excerpt
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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...
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complete Executive Summary.
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Market Segmentation
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US Wireline
Residential lines
Broadband Subscriber Growth
Broadband Revenue Growth
VOIP Subscriber Growth
VOIP Revenue Growth
Business lines
Access Line Losses
US ILEC IXC Narrowband Revenue Loss
US Wireless
Cell phone usage by Region
Cell phone usage by Demographic
Number of Subscribers
Average MOU`s
Dual-mode VoWLAN/cellular users
US "cellular only" households
US "cellular only" subscribers by age
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Table of Contents
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Chapter I
Executive Summary
1.1 Development of a Fixed Mobile Convergence Market
1.2 Market Forecast
Chapter II
Introduction And Background
2.1 Introduction
2.2 The Four Fixed-Mobile Convergence Scenarios
2.2.1 The Cellular Scenario
2.2.2 The Enterprise Scenario
2.2.3 The Consumer Scenario
2.2.4 The Fixed Cellular Scenario
2.3 Migration Paths Toward FMC
2.4 History and Background of Fixed-Mobile Convergence
2.4.1 Commercial Wireless Service Background
2.4.2 WLAN Background
2.4.3 VoIP Background
2.5 Fixed-Mobile Convergence: Overview and Statistics
2.5.1 The Shift from Fixed To Mobile
2.5.2 Cellular Spending Exceeds Wireline
2.5.3 Who Is Abandoning Wireline?
2.5.4 Wireline Replacement Statistics
2.5.5 Cellular Subscriber and Usage Trends
2.5.6 Landline Subscriber and Usage Trends
2.6 International Trends
2.7 Industry Trends
Chapter III
The Four Fixed-Mobile Convergence Scenarios
3.1 The Cellular Scenario
3.1.1 Overview
3.1.2 Pricing Differences Between Cellular and Landline
3.1.3 Other Factors In Mobile Substitution
3.1.4 Access Transparency
3.1.5 FMC Cellular Pricing Plans and Promotions
3.1.5.1 Landline Comparison Example
3.1.5.2 Cellular FMC Pricing Plan Types
3.1.5.3 Adding A Fixed Wireless Account To Cellular
3.1.6 Third Generation (3G) Cellular
3.2 The Enterprise Scenario
3.2.1 Overview
3.2.2 The VoWLAN/Cellular Solution
3.2.2.1 The VoWLAN/Cellular Dual-Mode Integrated Handset
3.2.2.2 The VoWLAN/Cellular Controller
3.2.3 A Standard for VoWLAN/Cellular: Unlicensed Mobile Access (UMA)
3.2.4 Limitations of VoWLAN
3.2.5 The Handoff Tradeoff
3.2.6 Integrated VoWLAN/Cellular Solution Issues
3.3 The Consumer Scenario
3.3.1 Overview
3.3.2 Bundling
3.3.2.1 SBC/Cingular Bundling Example
3.3.2.2 SBC Wireless Call Forwarding Device Offering
3.3.3 Bundling In Reverse
3.3.4 The Consumer Scenario VoWLAN/Cellular Offering
3.3.5 Bell Canada VoWLAN/Cellular Trial
3.3.6 British Telecom’s BluePhone
3.3.7 Drawbacks of the Consumer Scenario
3.3.8 Limitations On Subscribers
3.4 Fixed Cellular
3.4.1 Overview
3.4.2 Equipment and Configuration
3.4.3 Illustrative Rate Comparison of Landline vs. Fixed Cellular
3.4.4 Landline Bill Analysis
3.4.5 Wireless Operator Participation – The Sprint Trial
3.4.6 Enterprise Least-Cost Routing Solution
3.4.7 Additional Fixed Wireless Terminal Products
Chapter IV
Technologies and Standards
4.1 IP and FMC
4.2 IPs Impact on FMC
4.2.1 Transition to IPv6
4.2.1.1 Transition Strategies from IPv4 to IPv6
4.2.2 Mobile IP
4.2.2.1 Mobility and Routing
4.2.2.2 Mobile IP Improvements in IPv6
4.2.2.3 The Future of Mobile IP
4.2.3 Voice over IP
4.3 Mobile Wireless and FMC
4.3.1 First and Second Generation Wireless Technologies
4.3.2 Third Generation Wireless Systems
4.4 Wireless LANs & FMC
4.4.1 Issues with 802.11
4.4.2 WiFi Interworking with 3G Networks
4.5 Fixed Wireless & FMC
4.6 Personal Area Networks
4.6.1 Ultra Wide Band (UWB)
4.6.2 Bluetooth
4.7 The Unlicensed Mobile Access (UMA) Standard
4.7.1 UMA Operation
4.7.2 UMA Technology Operation
4.7.3 UMA Interoperability
4.8 The Fixed-Mobile Convergence Alliance
Chapter V
Segment Strategies
5.1 Strategy Overview
5.2 Cellular Carrier Strategies
5.2.1 Enablers
5.2.1.1 Marketing
5.2.2 Inhibitors
5.2.2.1 Price
5.2.2.2 Service Quality
5.2.3 The Sprint Example
5.3 LEC Strategies
5.3.1 Enablers
5.3.1.1 Bundling
5.3.2 Inhibitors
5.3.2.1 Mindset
5.3.2.2 Billing Systems
5.3.2.3 Resale
5.3.2.4 Marketing and Channels
5.4 Cable Strategies
5.5 Other Carrier Strategies
5.6 Equipment Provider Strategies
5.6.1 The Adjunct Approach
5.6.2 The Displacement Approach
5.6.3 SIP-Oriented Approaches
5.6.3.1 SIP Architecture
5.6.3.2 The SIP-Based Network Application Server Approach
5.6.3.3 The Unlicensed Mobile Access (UMA) Approach with SIP Migration
5.6.3.4 The VMSwitching Center (MSC)/Home Location Registry (HLR) Approach
5.6.3.5 The SIP-Based Premises Application Server Approach
5.7 Impacts on the Four Scenarios
5.7.1 The Cellular Substitution Scenario
5.7.2 The Enterprise Scenario
5.7.3 The Consumer Bundling Scenario
5.7.4 The Fixed Cellular Scenario
5.8 INSIGHT Strategy Recommendations
Chapter VI
FMC Market Forecasts
6.1 Summary
6.2 Methodology
6.3 Historical Wireless/Wireline Trends
6.4 Replacement Trends: The Cellular Scenario
6.4.1 Propensity of Cell Phone Users to Become Wireless Only
6.4.2 Wireless Carrier Pricing & Coverage Trends
6.4.3 Wireless Subscriber and Revenue Forecasts
6.5 Broadband, VoIP, and WLAN
6.5.1 Broadband Access
6.5.2 VoIP
6.5.3 WLAN
6.6 VoWLAN-based FMC Trends
6.6.1 Consumer Service Provider Strategies
6.6.2 Enterprise Service Provider Strategies
6.6.3 VoWLAN Forecasts
6.7 Wireless Replacement Forecast
6.7.1 Cellular-Only Households
6.7.2 Effect on Minutes of Use and Access Lines
6.7.3 Effect on Wireline Service and ILEC Revenue
6.8 3G and Wireline Broadband Substitution
Table of Figures
Chapter I
I-1 SIP-Based Network Application Server Approach
I-2 US Primary Residential Access Line Forecast, 2005-2010 (Millions)
Chapter II
II-1 Wireline vs. Mobile Phone Growth 1995-2004 (Millions)
II-2 Estimated US Cellular Subscribers, 1988-2004 (Millions)
II-3 Average Local Monthly US Cellular Bill, 1988-2004
II-4 Average Monthly US Cellular Minutes of Use, 1997-2004
II-5 Landline Telephone Penetration Percentage, 1998-2004
II-6 Cell Phone Penetration as a Percentage of All Phone Subscribers
Chapter III
III-1 UMA Overview
III-2 SBC Wireless Call Forwarding Device
III-3 Fixed Wireless Configuration
III-4 Wireless PBX Trunks For Corporate Least Cost Routing
Chapter IV
IV-1 Mobile IP Operation
IV-2 SIP Network Architecture
IV-3 UMA Functional Architecture
Chapter V
V-1 Basic Components of a SIP Network
V-2 The SIP-Based Network Application Server Approach
V-3 The Unlicensed Mobile Access (UMA) Approach
V-4 The Virtual MSC/HLR Approach
V-5 Motorola CN620 MOD
V-6 Motorola`s Enterprise Seamless Mobility Solution
Chapter VI
VI-1 Timeline for US Rollout of Consumer and Enterprise FMC
VI-2 Wireless-Only Households, 2001-2004 (Millions)
VI-3 Access Line Substitution, Residential and Business, 2000-2004 (Millions)
VI-4 Average Monthly MOU, Interstate Wireless vs. Res WL Toll, 2000 2004
VI-5 Wireline vs. Wireless Revenue, 2000-2004 ($Billions)
VI-6 US Cellular Subscribers, 2005-2010 (Millions)
VI-7 Wireless Monthly Minutes of Use per User, 2005-2010
VI-8 US Wireless Revenue, 2005-2010 ($Billions)
VI-9 Residential Broadband Subscriber Growth, 2005-2010 (Millions)
VI-10 Residential Broadband Revenue Growth, 2005-2010 ($Billions)
VI-11 US Residential Broadband VoIP Subscribers, 2005-2010 (Millions)
VI-12 US Residential Broadband VoIP Revenue, 2005-2010 ($Millions)
VI-13 US Home Networks, 2005-2010 (Millions)
VI-14 US VoWLAN/Cellular Dual-Mode Users, 2005-2010 (Millions)
VI-15 US Cellular-Only Households, 2005-2010 (Millions)
VI-16 US Yearly Wireline/Wireless Porting, 2005-2010 (Thousands)
VI-17 US Primary Residential Access Line Forecast, 2005-2010 (Millions)
VI-18 US Monthly LD Minutes of Use per User, Wireline vs. Wireless, 2005-2010
VI-19 US ILEC and IXC Wireline Narrowband Revenue, 2005-2010 ($Billions)
Table of Tables
Chapter I
I-1 US Access Lines, Residential and Business, 2005-2010 (Millions)
I-2 US Primary Residential Access Line Forecast, 2005-2010 (Millions)
Chapter II
II-1 US Wireline Telephone Lines
II-2 US Wireline Telephone Calls
Chapter III
III-1 Cellular Service Only Scenario: Advantages and Disadvantages
III-2 Typical Landline Bill
III-3 Typical Cell Phone Bill
III-4 Landline-Cellular Bill Comparison
III-5 Cellular Bill With 1000 Minutes of Use
III-6 Savings With Landline Cancellation
III-7 Consumer VoWLAN/Cellular Service Scenario: Advantages and Disadvantages
III-8 Landline vs. Wireless Rates
Chapter IV
IV-1 WiFi Standards Under the 802.11 Umbrella
Chapter VI
VI-1 Access Line Substitution, Residential and Business, 2000-2004 (Millions)
VI-2 Average Monthly MOU, Interstate Wireless vs. Res WL Toll, 2000 2004
VI-3 Wireline vs. Wireless Revenue, 2000-2004 ($Billions)
VI-4 Cell Phone-Only Usage by Region and Household Type, 2004
VI-5 Cell Phone Usage for the US Population by Demographic, 2004
VI-6 % of Cell Phone Users Who Make Most Calls on Cell Phones, 2002-2005
VI-7 Likelihood of Res Household Giving up Reg Telephones & Using Just Cell Phones, 2003-2005
VI-8 Top Priorities of US Cellular Users for Dropping Landline Service
VI-9 US Cellular-Only Households vs. Total Households, 2005-2010
VI-10 US Cellular-Only Subscribers by Age Range, 2005-2010 (Thousands)
VI-11 US Access Lines, Residential and Business, 2005-2010 (Millions)
VI-12 US Primary Residential Access Line Forecast, 2005-2010 (Millions)
VI-13 US Res Primary Access Line Declines by Wireless and Broadband VoIP
VI-14 US Monthly LD MOU per User, Wireline vs. Wireless, 2005-2010
VI-15 US ILEC and IXC Wireline Narrowband Revenue, 2005-2010 ($Billions)
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