Asia-Pacific braces for FMC

SYDNEY, Australia – Wired or wireless, fixed or mobile?

Very soon, the choice need not be between a landline or a mobile phone, a desktop PC or a laptop computer, a PDA or a smartphone, a television or a computer, a game box console or a gaming phone, a stand-alone music player or an MP3 phone but between carriers which could best provide a user-centric broadband experience that brings together all devices, all networks and all types of communication services.

Addressing an Asia-Pacific media conference here, Alcatel’s Asia-Pacific president Christian Reinaudo said this trend is clear across the world and not just in the Asia-Pacific.

Convergent technologies are fast blurring the lines between devices, platforms and networks that operators are being driven to transform their networks to deliver more sophisticated services.

As it is now, most devices can support voice calls, SMS, MMS, Web surfing, e-mail or blogging but it is still a fragmented experience for the user.

What if you can send a text message directly to your TV set, transfer a fixed-line call to a mobile phone when you need to rush out of the office just when an overseas call comes in, purchase train or movie tickets through your handset, track the location of your children or friends at any given time of the day, call overseas via a desktop PC, watch TV on your handset while the TV set-top box at home records another program you’d want to watch later on your laptop, and get one billing statement for all of these services from only one service provider.

Technology is clearly breaking down barriers and driving service integration, said Dave Hills, Alcatel’s director for global market positioning.

And at the core of this industry shift is fixed mobile convergence (FMC), which is expected to become a reality in different markets at different times.

David Kennedy, a senior analyst at Ovum Consulting, said the readiness of each country to adopt FMC or the capability to "deliver integrated services in one device across different access networks and a converged core network" is dependent on many factors.

Markets most ready to go into FMC are those already offering bundled service offerings, usually from fixed-line and mobile operators, and customers can clearly see the benefits of integration. Usually these markets also have high levels of fixed PSTN and mobile penetration, which are the infrastructure base for FMC.

In the Asia-Pacific, FMC-ready markets include Hong Kong, Japan, Korea, Taiwan and Singapore. In these mature or developed markets, FMC is a service differentiator and a strategy for customer retention, Kennedy said.

Reinaudo, however, emphasized that even in less developed or emerging markets, the basic demand of customers is the same – simple, user-centric services that offer great value.

Alcatel estimates, for example, that the number of Internet Protocol television (IPTV) users will grow from 2.6 million today to around 70 million to 100 million by 2010. In the Asia-Pacific, IPTV users are expected to increase from 900,000 today to 16.5 million by 2010.

In 2005, Pyramid Research forecast FMC revenue to reach $80 billion in 2009, or six percent of total communication spending worldwide.

Three trends, according to Reinaudo, are driving operators in the Asia-Pacific to move toward FMC – demand for multimedia and video services, demand for simplicity and mobility on any device, and a price-sensitive customer base.

In emerging markets like Thailand, the Philippines, Malaysia, Indonesia and China, there is still a possibility that FMC may be adopted. 

"I really think that in the Philippines, this kind of transformation could happen," Reinaudo said. "This is because the carriers there are very dynamic, offering both fixed and mobile services and underlying this dynamism, there could be some evolution."

Alcatel actually sees more large-scale network transformation projects on the horizon in the Asia-Pacific in 2007. It is only a question of when they will happen in a particular market.

"Every operator around the world is facing different challenges and all have different starting points, but regardless of the starting point it is clear that network transformation is a global trend, which is also fundamentally changing the nature of our relationship with operators," Reinaudo said.

He emphasized though that for FMC to take off in any given market, there should be a real business case for the carriers.

"The vendor cannot dictate any trend," he said.

Alcatel’s IP networking transformation projects around the world, however, are indicative of where the future of telecommunications is heading.

In 2004, Alcatel won a $1.7-billion product and service contract from AT&T for the delivery of differentiated voice, video and data to 18 million households by 2008.

It also won a contract from British Telecom for the migration of voice and broadband over a single IP infrastructure to a residential market targeting around 30 million lines by 2010.

Alcatel’s IP products are likewise deployed in 24 Chinese provinces though Alcatel’s contract with China Telecom for the construction of an IP backbone that will connect 200 cities. 

Last year, Alcatel was also chosen as Telstra’s fixed network IP and FTTN network transformation partner.

"The time is now," said Basil Alwan, president of Alcatel’s IP division, in a presentation.

The next three years will actually be critical for operators, said Geof Heydon, Alcatel’s director for innovation and market development in the Asia-Pacific.

As the communications environment evolves, true convergence is gaining ground but as Alcatel sees it "the big picture is already in."