Business FMC Still a No-No?

Major mobile service providers--in general--seem to remain cautious about fixed-mobile convergence for business customers, mostly because of continuing uncertainty about the business model impact.

In fact, many mobile executives continue to believe they stand to lose more revenue than gain if they get aggressive about allowing mobile handsets to communicate using fixed broadband facilities, say researchers at In-State.

"This is clearly the case in the United States, with the exception of T-Mobile, which has primarily been focused on the consumer market," says David Lemelin, In-Stat analyst.

In-Stat estimates that 20 percent of businesses with Wi-Fi use it to make voice calls, which is one reason mobile providers cannot be sure business users would not simply shift former mobile traffic back to the wired network if it is possible to do so.

Most executives would agree that adding FMC can be a marketplace differentiator. Clearly T-Mobile hopes it will be. But there seem to be more questions about whether FMC is anything more than a feature to attract and retain customers.

T-Mobile and Sprint Nextel have more incentive than Verizon and AT&T to try, however. T-Mobile and Sprint do not have fixed access accounts or usage to cannibalize. If either carrier can slice its churn by promoting FMC, especially to business users, that's probably enough reason to do so.

At a higher level, there obviously is some interest in determining the extent to which business customers can be convinced to abandon some or all traditional landlines in favor of wireless-only service.

FMC--as opposed to simply installing indoor signal repeaters (femtocells)--raises revenue issues. With the femtocell approach a mobile provider still can offer the benefits of better indoor signal quality, an advantage touted by FMC proponents.

And if the FMC attraction is lower calling costs, mobile providers can create "home" or "office" zones where calls are less expensive than on the macrocell network, providing the end user lower prices, without shifting traffic to the wired broadband network.

But FMC is likely to get more attention as mobile broadband usage grows and shifting some traffic--especially non-voice applications--to the landline network and off the mobile network.

Of course, that's why fourth generation wireless networks are being built: to handle all that new broadband traffic.

Still, Strategy Analytics thinks dual-mode mobiles with built-in Wi-Fi will proliferate. People will want to use the feature. But choices have to be made: femtocell or dual-mode? Cannibalize some wireless revenue or risk losing share? No wonder carriers are cautious.