Australia Falling Behind in Fixed-Mobile Convergence

In the past five years, there have been much discussion and developments on fixed-mobile convergence (FMC), a concept that puts the user - rather than technology - at the centre of communications, and one that will shift the industry's focus from quality of service (QoS) to quality of experience (QoE). FMC is poised to be the next battlefield and future hope for the Australian telecom market - one which has been plagued by the increasing irrelevance of legacy technologies and heavy commoditisation. FMC in Australia, however, has so far been about talk, and little action.

Recent research into the state of play of Australia's FMC reveals that the country is at serious risk of falling behind other comparable markets, with commercialised offerings and notable consumer and business adoption not expected until 2010. That puts Australia three to five years behind Europe, North America and certain economies in Asia.

Australia is going through a five-phase FMC evolution: Commercial Convergence, Product Feature Convergence, Access Replacement, Device and Access Convergence, and Full FMC. Despite FMC discussions, pre-convergence strategies, such as bundles and single voicemails, which have been used for over a decade remain dominant as churn-reducing and value-adding strategies in the Australian market.

In 2008, FMC push is expected to come from mobile operators, who will heighten their Access Replacement efforts, also known as fixed-mobile substitution strategy, while Device and Access Convergence, involving dual-mode WiFi/3G handsets, will not gain momentum until 2009. Full FMC, utilising IMS functionality and offering service convergence on any device and any network, is not expected in Australia until 2010. Australian mobile-only operators with no revenue cannibalisation threats, appear to be more open and aggressive in pursuing FMC strategies.

International case studies show that full-service carriers with fixed and mobile services (such as France Telecom and NTT) experience more success with their FMC launches, compared to single-service operators (like BT or T-Mobile). Nonetheless, Australian full-service operators like Telstra and Optus, while technically best positioned to offer FMC, were found to be reluctant to discuss their FMC strategies. For full-service providers, legacy organisational structures and a lack of proper commercialisation plans tend to be a larger inhibitor to the introduction of FMC services than do technical issues.

Full-service operators are expected to begin trialling FMC services in Australia in the second half of 2008, with a small number of trial business users. Commercial offerings available to the wider market will likely become available in 2009, initially targeting business users. Notable FMC adoption by both consumers and businesses is not predicted until 2010. Even then, Australia will only see 50,000 FMC users - a very tiny fraction of the country's mobile and broadband user bases.

The industry needs to move quickly or risks falling seriously behind in FMC, which means Australian telecom users will be shielded from advanced and competitively-priced converged services their overseas peers have been enjoying. Leadership from the country's leading telcos will be key in this process.

About the Author

Warren Chaisatien is the Managing Director of Telsyte (http://www.telsyte.com.au), an Australian-based market research consultancy specialised in the competitive intelligence of the converged communications market. Telsyte's expertise is centred around the three core competency areas of Carrier & Broadband, Mobile & Wireless, and Enterprise Communications. Telsyte provides industry insights to its clients through custom research and consulting as well as ongoing research, including market reports and online databases.

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