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FMC: A Diamond in the Rough? |
By Susana Schwartz
Despite the current lack of enthusiasm for major FMC services, recent calculations by Insight Research indicate that the revenue for FMC will most likely grow by 112.3 percent by 2011.
“Revenue” for FMC refers to the portion of FMC that rides atop SDPs. In 2006, revenues were $26.2 million; by 2008, Insight projects it will be up to $360 million, and by 2011 $1.13 billion.
While those types of predictions are easy to find, momentum has yet to build up.
A few years ago, SBC rolled out a docking cradle for wireless phones that would automatically route cell calls to the landline when people were home or in their office, but that service didn’t take off. Not to be discouraged, SBC was testing a dual-mode cellular-to-Wi-Fi service for business customers. Also continuing to go forward is the BT Fusion “one-handset, one-number” product. While it has not attracted a large audience for its seamless handovers from GSM to Wi-Fi, the hope lives on that enterprises can reduce the number of supplier relationships they have to manage.
That—along with the promise of unified messaging, all at a lower cost—has attracted around 30,000 users each year since BT Fusion’s launch. While conservative, a recent survey by Bathwick Group and silicon.com indicate that enterprises are, indeed, looking for a single supplier and a simpler way of managing communications. In the survey, 40 percent of respondents labeled the ability to automatically detect the cheapest route for a call “very valuable.”
What is the holdup? Some of the problem may be a lack of incentive for wireless players, which currently are riding high on the hog while their wireline brethren take a face dive into the muck of diminishing voice revenues.
“With a 4 to 7 percent line loss per year, you can see a great incentive for a landline company for FMC, but wireless companies are still thinking about whether they need a partnership with wireline players right now,” says Bob Rosenberg, president of Insight Research.
“The question of whether wireless providers would be able to provide comparable services to what subscribers access by going directly to the Internet will determine if they want to stay walled-garden in their approaches or not,” Rosenberg believes.
Perhaps reluctance is due to complexity in managing the many pieces involved with FMC. “While enterprises would pay a premium for convergence that would make employees accessible and flexible round the clock, the prospect of mediating cellular providers and PBX providers is daunting,” Rosenberg concedes. “When your network providers and vendors start pointing fingers at one another, who is in charge?” He notes that the LAN, Wi-Fi network, cellular network and PBX are all components that have to be managed and governed by someone.
Cisco and Avaya recently teamed with handset providers and underlying carriers, so perhaps management solutions will evolve to help carriers.
In the meantime, telcos continue to forge ahead with FMC plans. A case in point is Orange, which in 2007 will launch an enterprise FMC solution called Unique.
Like Orange, BT also announced recently the launch of its enterprise FMC solution. Both companies plan to offer low price points, attractive tariffs, and high levels of professional services to attract customers.
Will Carriers Encounter More Reasonable Franchising?
Telecom providers like Verizon Communications and AT&T Inc. hope to realize the fruits of their multibillion-dollar investments in IP networks now that the FCC has adopted an order that prohibits franchising authorities from unreasonably refusing to award competitive franchises for cable services.
On Dec. 20th, the FCC released a Report and Order and Further Notice of Proposed Rulemaking in which the commission concludes that the current operation of the franchising process constitutes an “unreasonable barrier to entry” to cable competitors.
The FCC approved by a 3-2 vote Chairman Kevin Martin's proposal to increase competition by making it easier for telcos to secure local franchises. The new rules will include a 90-day deadline for local governments to grant franchises, and a relaxation of requirements to “build out” services to all parts of certain geographical regions.
The proposal also bans the “attachment of conditions” to video franchise applications from new competitors. That means the likes of Verizon and AT&T cannot be pushed to build out their systems faster than the incumbent cable operators competing in their markets.
This could be a big win for carriers that have been pushing the FCC to simplify the process for obtaining cable franchises. It seems Chairman Martin had been listening, as his speeches the past few weeks were replete with dissatisfaction over rising cable rates in a time when other communication offerings are getting less expensive.
Martin had gone so far as to blame certain local franchise authorities for sometimes “obstructing” or “derailing” new video competitors.
He acknowledged that the cable industry has maintained a virtual monopoly despite the billions of dollars telcos have invested to upgrade networks to support video.
“As the telephone companies and others began actively seeking to enter video markets in late 2004 and 2005, … we began to hear from some providers that local authorities were making the process of getting franchises unreasonably difficult,” Martin said recently.
By adopting a measure that would give state and local officials less latitude in awarding cable franchises, the desired effect would be to eliminate drawn-out local negotiations with no time limits; as well as unreasonable build-out requirements; unreasonable requests for “in-kind” payments that attempt to subvert the 5 percent cap on franchise fees; and unreasonable demands with respect to public, educational and government access.
Though the draft proposal was made public in the last few days of 2006, cablecos are already contending they are going to be unfairly penalized. No doubt there will be more to report in upcoming weeks.
Mobile Industry Heads to Supreme Court
Sprint Nextel Corp. and T-Mobile USA Inc. were rejected by the 11th U.S. Circuit Court of Appeals when they asked for a stay of a final order reversing the FCC’s decision to preempt state regulation of line-items on mobile phone bills.
The companies wanted the 11th Circuit to reconsider a decision that struck down the line-item pre-emption component of the 2005 truth-in-billing ruling.
The companies must file for Supreme Court review of the 11th Circuit ruling by Feb. 27.
IMS Forum Finalizes Plan for IMS Certification
The IMS Forum finalized the test plan for its first IMS Plugfest, which aims to establish a roadmap of overall objectives for an industry-wide validation process for IMS applications and services in the “Services and Applications Layer” of the IMS architecture. The Plugfest is scheduled for Jan. 15 to 19 at the University of New Hampshire InterOperability Lab in Durham, N.H.
The Next MVNO?
Although Apple Computer’s handset is still a rumor, some believe it could change the status quo for carriers and handset makers, according to an article in CNNmoney.com/Fortune. Apple could become an MVNO because of its substantial retail and online presence.
Media Giants May Compete With YouTube
As reported in the New York Times, media giants including NBC Universal, News Corp., Viacom and possibly CBS may forge a partnership to build a video-sharing site to rival YouTube.
Google Flirts With Mobile
Google may try to make a foray into mobile with a partnership with Orange that could yield a Google-branded mobile phone. The phone reportedly would feature built-in Google search capabilities.
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