More Telecom Upheaval On the Way

By R. Brough Turner

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In developed countries, mobile phone operators are running out of new prospects (already there are more mobile phones than people in Sweden). New data services may increase the average revenue per user, but there’s a limit to consumers’ budgets.

And while battles for market share help consumers, they’re costly and provide limited growth for operators. But there’s one enormous revenue base that’s ripe for disruption — traditional fixed-line operators.

Today’s fixed-line telecom revenues are roughly split between consumer and business. For mobile operators, the most promising line of attack is on the business side. Winning a business account means direct enterprise revenues plus the potential to convert the personal subscriptions of their employees.

The keys to success are in a pair of three letter acronyms: FMC (fixed-mobile convergence) and IMS (IP multimedia subsystem).

Fixed-Mobile Convergence

Like any convergence vision, FMC is an umbrella for several potentially disruptive capabilities. The most popular is a single handset working simultaneously as your mobile phone, home phone and office phone. Another is one phone number, with its set of services, that follows you across multiple devices: your mobile handset, your office phone and even a conference room speakerphone.

The critical point for both of these is the convergence of fixed and mobile networks to enable a range of new services that work irrespective of location, access technology or terminal. Those new services are the lever mobile operators need to disrupt traditional relationships and capture fixed-line revenues.

Of course, turmoil in the lucrative enterprise market is significant for anyone with a stake in telecommunications, including incumbent phone companies and new VoIP players. But while converged networks open the doors to any application provider, in the real world of incremental migration, mobile operators have the edge.

How to implement FMC? IMS offers mobile operators their best shot at the enterprise FMC market.

IP Multimedia Subsystem

IMS is an evolving architecture for providing voice, video and other multimedia phone services to mobile and fixed phones. IMS is based on the protocols and principles of IP telephony, but with the important difference that IMS focuses on the central management and billing functions so critical to operators. IMS allows operators to offer a centrally administered VoIP service, on a managed IP network, in a “walled garden” if desired.

IMS standards come from the 3rd Generation Partnership Project (3GPP), a consortium focused on evolving GSM networks to 3G W-CDMA. But the IMS architecture and service models are also being used by 3GPP2 (a different organization focused on CDMA2000 networks) and TISPAN (a European organization focused on next generation fixed networks). Thus IMS principals are the basis for all variants of the next generation network (NGN) envisioned by the telecommunications industry.

Of course today’s mobile systems are hybrid networks using circuit switching for voice telephony and packet switching for newer data services. There is no economic justification for replacing the mobile circuit-switching equipment as yet, so first generation FMC on IMS will involve hybrid IMS & older mobile switching systems.

Operators and equipment suppliers realize this and are designing hybrid solutions accordingly. In addition, IMS standards come in several revisions (3GPP Release 5, Release 6, etc.) — most not “fully baked” at this point — and additional revisions will emerge over the coming years. So today’s ““IMS”” products, widely hyped at this year’s CTIA and Supercomm telecommunications industry trade shows, are evolving hybrids that are ““IMS-ready,” but deployable today.

Mobile's Advantage (For Now)

Today mobile operators have an FMC advantage, as VoIP can run over any fixed broadband network, while mobile voice uses the mobile operators existing voice equipment or their managed network. Their “walled garden.” Eventually this advantage will disappear.

In the future, fixed and mobile broadband Internet access (WiFi, WiMAX and 3.5G/4G) will be widely available from multiple competing providers. Market forces will then kill the walled garden and open access will be widely available. Since 3rd party VoIP services (Vonage, Skype, etc.) can run over anyone’s broadband connection, in the long term, mobile operators will lose their lock on mobile voice services.

Neither Skype nor Vonage uses or needs IMS. But right now, mobile operators have a big window of opportunity to launch FMC services and capture enterprise telecom revenues.

And, given that consumers like simplicity and flat-rate bundles, an agile wireless operator should be able to concoct profitable offerings despite the changes the next decade will bring. The key for mobile operators is to strike now while the advantage is in their court.

Brough Turner is senior vice president, CTO and co-founder of NMS Communications, a provider of technologies and solutions for mobile applications and infrastructure.