Cable & Wireless UK Aims Enterprise FMC at Mobility Share of Wallet

| Mar 11, 2008 | Competitive Intelligence Report
| Business Telecom Services - Europe, Enterprise Mobility - Europe

| Analyst: Sandra O'Boyle

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

March 8, 2008 -- C&W has promised to launch picocell-based FMC solutions to its IP VPN customers in the UK by the end of 2008. C&W has signed a five-year wholesale roaming agreement with Orange UK to carry customers’ mobile traffic when out of range of the campus or office picocell base station. Customers will use standard 2G/3G handsets with C&W-branded SIM cards for voice and data, and they will have access to single numbers, bills and voicemail boxes, as well as mobile Centrex functions. No pricing has been announced.

Analytical Summary

• Current Perspective: Positive on Cable & Wireless’ plans to deliver picocell-based FMC to C&W’s IP VPN customers in the UK later this year, because this allows C&W to claim it has the potential to kick-start the stuttering enterprise FMC market and it adds an important mobility component to its managed services portfolio. C&W’s approach provides enterprises with an alternative FMC service that uses their existing devices and may help improve indoor GSM coverage and lower combined fixed and mobile telephony costs.

• Vendor Importance: High to C&W, because it marks its entry into the UK enterprise mobility market for the first time, fills the FMC gap in its product portfolio and provides the carrier with the means to compete with rival BT on more equal footing. The ability to deliver FMC may help the carrier expand its IP VPN customer base and take C&W closer to the golden prize of managing a customer’s fixed and mobile voice and data estates.

• Market Impact: High on the enterprise FMC market, once C&W launches a standard service towards the end of 2008, because the choice of commercially available FMC services in the UK that are suitable for large enterprises has so far been limited. The only service that springs to mind is BT Corporate Fusion, which takes a different approach to C&W and requires customers to invest in new dual-mode WiFi/GSM handsets and WLAN access points on campus.

Recommended Competitor Actions

• BT should come out with some examples of customer deployments of BT Corporate Fusion and promote its professional services experts in mobility in order to persuade enterprise customers that they should be spending money with BT rather than C&W. BT should also now deploy its own guard band spectrum allocation to provision a similar picocell service in conjunction with its current Vodafone MVNO agreement.

• Other guard band license owners, particularly COLT, that sell competitive IP VPN services to UK customers should look to establish wholesale partnerships with other UK MNOs to provide the mobile roaming that will enable them to provide campus and in-office picocell FMC solutions of their own.

• Verizon Business Services has dipped its toe in the FMC waters with the PBX Mobile Extension service it offers to UK customers alongside IP VPN packages. The company should showcase its existing enterprise mobility capabilities and build on its existing partnership with Vodafone to develop campus-wide FMC solutions.

• O2 is currently testing similar campus picocell/microcell/femtocell FMC services and it is planning a service launch for 2009. Though it is well placed to deliver picocell FMC services that route calls over its broadband DSL network (recently acquired from Be) for SMEs, the operator should also consider partnering with one of the IP VPN providers listed above in order to target similar services at large enterprises.

• T-Mobile is currently investing in and trialling Ubiquisys femtocell technology, but it does not have a guard band license. The operator will need to either buy one, as these guard bands are tradable assets; actively court an IP VPN provider that does own one to deliver picocell based FMC services; or concentrate on providing alternative FMC packages based on WiFi that integrate better with its established WiFi hotspot business.

• Though UK MNOs such as Orange and Vodafone will undoubtedly benefit from wholesale partnerships with IP VPN providers that will see GSM calls routed over their networks, they should also seek to address a perceived weakness in their ability to offer high-quality and resilient indoor 3G and HSDPA services, which is a key incentive to mobile VPN sales.

Recommended End User/Customer Actions

• Cable and Wireless UK IP VPN customers should take a close look at the carrier’s FMC service when it finally appears, as depending on tariffs and on premise equipment prices, it may offer real potential for reducing monthly fixed and mobile telephony bills.

• All business customers looking to create campus communications solutions should be aware that there will soon be new technological alternatives available. Although the industry tends to define FMC in terms of BT's Corporate Fusion product, GSM picocell/microcell/femtocell base stations like those promised by Cable and Wireless can potentially achieve similar cost-savings with attractive ROI models that do not require investment in dual-mode GSM/WiFi handsets.

• MNCs looking to strengthen a GSM signal within a building complex should be aware that mobile operators have been offering solutions and services to correct the in-building cellular problem for some time. End users should also be aware of that the UK's mobile operators will be able to offer wide-area GSM, besides campus GSM coverage, though generally at a high cost.

• End users should look for scalability promises from GSM campus service providers upfront. Although picocells can, in theory, be aggregated to allow for larger simultaneous call quotas, there are channel management issues involved with this. End users should seek to understand the cost and resource implications of managing multiple picocell clusters for deployments with large user numbers.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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