Current Analysis Roundtable: Are Enterprises Ready for Fixed Mobile Convergence?

Summary

Issue

Fixed mobile convergence (FMC) has become the "buzzword du jour" in an industry that loves to hype the next big thing. The FMC-word has surpassed voice and data, communications and media and IT convergence in industry discussions. Whether it deserves this hype or not, FMC captures the imagination because of its promise to deliver transparent services across fixed and wireless environments. An operator´s enthusiasm for FMC depends on the competitive pressures that operator faces.

Fixed operators (e.g., BT) that do not own mobile networks and suffer from declining PSTN revenues, fixed-to-mobile substitution and the future prospect of flat-rate VoIP calls are most keen on FMC. Operators such as France Telecom (Orange) with fixed and mobile arms are also keen, but having a hard time integrating the fixed and mobile groups and getting the mobile arm to play ball. The business case for FMC is tougher to make for mobile operators, although they are warming up to the fixed world now that mobile voice revenue growth is slowing and mobile data service revenues have yet to take off. FMC services for consumers and small businesses are starting to appear in Europe based on cheaper calls using UMA or SIP-over-WiFi, and--at a more basic level--the bundling of mobile and fixed services.

To a lesser degree, FMC services are also available for large enterprise customers. However few companies have a truly integrated vision for controlling fixed and mobile communications and a strategy for managing unified communications across their organisation. Right now, it´s handled in a piecemeal fashion. Remote access services that used to rely primarily on dialing into the corporate network are now being given mobile treatment across various access methods including WiFi hotspot access and 3G networks. With IP VPNs and IP PBXs growing in demand, companies are routing mobile calls over their IP networks to save costs. With these issues in mind, Current Analysis convened a roundtable in London with a group of leading telecom journalists and a panel that included BT Global Services Director of Mobility Rakesh Mahajan, General Manager Enterprise VPN Users Association Ed Vonk and Current Analysis VP Analysis Jerry Caron to discuss whether enterprises are ready for FMC and whether the market is hype, reality or somewhere in between.

Current Perspective

FMC opportunity exists with the enterprise, yet most services on market today are for consumers

Enterprises have a greater need for FMC services than consumers, because for them the appeal is not just about saving money on mobile calls with a new handset. Employees are increasingly mobile and using mobiles instead of fixed lines. According to BT´s research, 30% to 70% of employees will use a mobile phone at their desk, even though a desk phone is in reach. Enterprises need to get a handle not only on their mobile spend but also ensuring they have a unified IP communications strategy across their fixed and mobile infrastructure. Increasingly securing mobile devices has become critical as has improving employee productivity outside of the traditional office environment. Ironically most FMC services on the market today have been geared towards consumers and while we are seeing some take-up, it is far from overwhelming. The selling point of cheaper calls offset by a rather limited range of handsets and applications has so far diluted the appeal of FMC for the majority of consumers. Yet for enterprise customers, FMC looks far more appealing. The cheaper calls are always welcome, especially if this is extended outside the office to wireless cities (WiFi meshed networks), enabling mobile email and applications increases productivity and as long as the mobile devices are secure and functional at the right price points, having the latest fashionable handset is not an issue.

Enterprises understand the business case for FMC, but are not sure what to ask for

IP is the enabler and the foundation for enterprise FMC services. Fixed and mobile voice and data can be sent over IP networks and most large enterprises now have IP VPNs and plans for IP telephony. Over 60% of new lines will be IP telephony lines and in RFPs enterprises clearly want to extend corporate applications capability out to the mobile users. Unified messaging is still not unified between fixed and mobile infrastructures, but enterprises clearly see that as a sensible strategy to have the same the softphone, IM software and an integrated corporate directory across fixed and mobile devices.

However, enterprises are not exactly saying they want dual-mode phones. They are not necessarily buying the WiFi side yet, perhaps also considering it´s better to use a mobile PBX or picocell solution in building and use the same phone as the GSM world. On the other hand, WLAN gives you more than voice, it´s suitable for mobile data at relatively high capacity, although you must spend more so the network is voice quality and there are no gaps in the WiFi network. According to Rakesh Mahajan at BT, "Demand is growing in RFPs for FMC services. Enterprises are saying we need to do something but we don´t know what we need to do. We don´t know what´s possible." It would also appear that the market is not ready to answer all the issues.

Then there are still quality of service challenges to overcome. In business environments today, if employees are worried about the quality of a call experience for an important call, they will use a fixed line when they can. Service providers such as BT are recommending that enterprises might only need a certain percentage of IP phones in an organization and then can deploy its Corporate Fusion dual-mode (GSM/Wi-Fi) phones and leverage wireless LAN infrastructure to realize FMC benefits. Voice over wireless LAN has its detractors and it is still early days. FMC is complex in the enterprise space and certainly not plug and play. BT Corporate Fusion service is only offered as a completely managed service.

Challenges are that fixed and mobile services may not come from the same provider. For global enterprises, this is certainly the case and the challenges are multiplied, with integration services becoming critical to getting FMC to work across a large geographically dispersed organisation. Ed Vonk of the EVUA was emphatic in pointing out that QoS and security are most important concerns for enterprises when it comes to FMC. Seamless roaming has been built up as an issue within the industry, yet for enterprise customers it´s not their biggest concern considering the number of times employees have to carry calls from inside building out to car is not that high.

FMC needs an ecosystem and clear roles for fixed and mobile operators and vendors

Operators that are clearly taking the lead on FMC services are investing in IP NGN to support revenue growth and improve efficiency. A key component of IP NGNs and enabling FMC is IP Multimedia Subsystem (IMS) and a Service Delivery Platform, essentially enabling operators to deliver user-centric services across multiple access, core network layers and devices.

Why would pure play mobile operators such as Vodafone want to eat their own lunch and push FMC services? Enterprise business is a big cash cow for mobile operators and fixed-mobile substitution is their main strategy. Although mobile operators are being pushed towards offering free calls between employees or on-site, there is no real incentive to push vendors such as Nokia to add WiFi and WiMAX to mobile devices. That would directly compete against their expensive 3G and HSDPA mobile data networks that are nowhere close to being paid off. Mobile operators come from the consumer world, and according to the EVUA have failed to address large enterprises' mobility needs, especially enterprises with operations in lots of countries. A mobile operator´s ability to integrate its global mobile estate with its corporate IP network, for example, is questionable and frankly most lack the skills to do that.

A truly converged fixed and mobile operator would appear to be in the strongest position to drive FMC - but these are few and far between in reality. In many cases, these are the same companies - France Telecom (Orange and Orange Business Services), Deutsche Telekom (TMobile and TSystems), yet they have different agendas and don´t necessarily mesh business plans in practice. Top management are adamant that they will force them to work together on FMC, but this is still a work in progress at all levels.

So who will end up owning the FMC customer? From the enterprise customer perspective, FMC is a complex task, where security of mobile data and integration and management of voice and data applications is the key. So, too, is being able to manage thousands of devices; for example, in case of theft or loss being able to lock the device, wipe it clean and have all the information that you had on it centrally backed up. System integrators such as IBM specialize in doing just that for large enterprises as do global service providers such as BT, Orange Business Services, Tsystems, and to a limited extent specialist remote access providers such as iPass. In these cases, they would just procure mobile services and manage the contracts and devices for the end customer. BT, for example, does not need the cooperation of mobile operators for Corporate Fusion in areas where it does not have an MVNO arrangement.

Enterprise FMC can be made to happen today with the proper integration skills

In summary, the enterprise market is ready for FMC, in the sense that there is real demand from enterprises, particularly the large ones, to get better value out of mobility and integrate their communications. Every company has to support mobile and home workers and costs of mobile services are still extremely high for enterprises and they need better control than having employees submit mobile phone bills. Many organisations expect far more integration of fixed and mobile services in the coming years, including integration of mobile voice and data into the VPN, integrated corporate voicemail and directory systems, availability of IP PBX and IM features on mobile handsets and a single number for both fixed and mobile, services.

The enterprise FMC services we see today such as BT Corporate Fusion with voice over wireless LAN are just the beginning, and there has to be more to FMC services than saving money on calls. The potential to integrate mobile VoIP and remote access data software with IP PBX functionality and get mobile, PBX and IP to work together is the most promising route forward. However, it is all about having the necessary integration skills and the vendor and operator ecosystem to bring an FMC service to life, not technology per se, which the industry has tended to dwell on to date.

Business model and regulatory factors will hold back pure FMC- anywhere, anytime, any device user-centric seamless mobility services - more than the technology itself. It will be a long time before the fruits of IMS implementations are realised, possibly talking a decade or more. That ideal can be made to happen today with the proper integration skills. Another issue entirely is whether FMC will be a money maker. Service providers think by combining solutions and providing integration they can charge more; on the other hand, enterprises think if they combine things, it will be cheaper for them. Everybody cannot win and FMC is likely to lead to further industry consolidation - voice and data services that now go to fixed and mobile providers would be retained by convergent service providers. This convergent service provider would need to provide better device support, be able to support both voice & data; improve service quality and provide the required billing, analysis and reporting tools. Consolidation of service providers could also enable better global coverage.

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Recommended Actions

Vendor Actions

. Mobile operators that are targeting large enterprises need to take a far different approach if they hope to have a direct relationship with the end users. Solutions have to take into account that the enterprises need professional services teams to integrate mobile voice, email and data applications into the IP PBX and corporate IP network. Mobility solutions have to support all access types, end-point and device security, management of mobile device fleets, and integrated reporting and billing. For global enterprises, addressing international roaming charges and providing global contracts for mobile are a key requirement.

. Global service providers such as BT, Verizon Business, AT&T and Orange Business Services realize they have to blend any enterprise FMC solutions into their existing remote access, IP VPN and IP telephony services. This ensures the operator can provide a fully integrated communications solution or risk losing customers to system integrators and outsourcers that will end up doing the integration for customers.

User Actions

. Enterprise customers should start including an FMC or unified communication dimension in their RFPs for IP WAN and IP telephony contracts and ask for details on integration services support. This gives enterprise customers at least a roadmap from potential service providers on their FMC capabilities and ability to deliver an integrated communications solution across fixed and mobile and across large enterprise sites, small sites, and home and remote workers.

. Enterprise customers should also intensify demands that mobile operators should become more accommodating of their need for mobile cost control and visibility. The mobile operators are making progress in their dealings with enterprise customers, but can go further. Large enterprises, for example, should insist that mobile operators compete for their business by integrating with any mobile-workers solution they choose to put in place, including one that trunks mobile-phone traffic through PBX systems and across the IP WAN.

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