Understanding obstacles to convergence

• Tags:
• Scenario,
• Gartner,
• Calling,
• Cellular

Peter Judge ZDNet.co.uk

Published: 25 Jul 2007 08:16 BST

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Convergence is a nirvana, we hear. Business people all want one handset, one number and one inbox for all their voice and data communications. And apparently they want to combine their home and office communications when necessary. But is that really true?

"Convergence is only nirvana from an operator's point of view," says Dean Bubley of Disruptive Analysis. He's sat through so many vendor presentations that start from this sort of assumption, he's starting to get sick of it.

Operators want to own their subscribers and discourage them from using services from other providers, to boost their all-important ARPU (average revenue per user). But Bubley doesn't believe users want that. "Only one percent of people want to have one thing," he says.

It's true that the complexity of our current communications is wearing and wasteful. Users reach for a mobile phone because the number they want is in the address book, and then they make a pricey mobile call, even though they could dial the same number for free on their desk phone.

It has been estimated that up to half the phone calls business people make in the office are on mobile phones, for simplicity or because they are away from their desk. Mobile calls make up 80 percent of enterprise phone bills, according to research company Analysys.

It's a simple step from that to the conclusion that fixed-mobile convergence (FMC) will save lots of money. If you give your staff dual-mode phones, such as Nokia's Eseries models, or a dual-mode BlackBerry from RIM, they can automatically make VoIP calls over the Wi-Fi when they are in the office, and revert to the cellular network outside. They always have the same device and always have their data with them.

There are a lot of optimistic predictions from analysts: there will be 170 million FMC subscribers in the world by 2012 and FMC revenue will amount to about three percent of the world's mobile subscriptions, according to market research firm Informa. Dual-mode handsets will make up five percent of the handsets sold in the world by 2011, Informa predicts. But it's not that simple.

Will small businesses bother?
The smallest businesses tend to have a consumer-like outlook on life. Some of the FMC benefits, such as cutting costs by central billing, will pass them by. "FMC faces a substantial challenge in capturing the consumer imagination", says Informa senior analyst Paul Merry, who reckons only 4.4 percent of consumers will have FMC in five years' time.

FMC isn't even necessarily the best answer to the problem we used in the example above: that of accessing a number in a phone book. Users want to have all their phone numbers available when they make a call, but that doesn't mean they need them only on one phone — why not make it easy to share phone books and preferences between all the phones a user has? He or she can dial any number from any phone — and has the benefit of redundancy, if one phone breaks or gets lost.

"Consumers will buy multiple devices — although they won't carry them all at the same time," says Bubley. "Why would anyone want just one device? Phones are so cheap they are essentially consumer items, equivalent to the price of a new shirt or a pair of shoes."

The business case for FMC
Informa is more optimistic about enterprise FMC, predicting 8.8 percent of business users will have FMC phones in five years, drawn to them by the hope of unified messaging and a single account. But they might be disappointed.

Analyst Gartner is sceptical about the business case for dual-mode convergence. Instead of going all out for convergence, most enterprises should "let FMC happen" over the next seven to 10 years, as their phones and other kit naturally gets replaced, according to Gartner managing vice president Bob Hafner. Less than 30 percent of...

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