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Sin Siew Teyew
Director of Telecoms (Asia-Pacific)
Frost & Sullivan.
Fixed Mobile Convergence is at a nascent stage in Asia-Pacific. While the trendsetters have already deployed FMC services in advanced markets, the lack of ubiquitous telecom infrastructure, coupled with the lack of regulatory readiness has delayed the deployment in developing markets.
The proliferation of FMC services is expected to be limited to high ARPU generating urban areas in the medium term. Initially, service providers are expected to offer customized FMC services to the enterprise segment. While the telecom market is undoubtedly moving towards FMC, the development is unlikely to be rapid.
The initial phase would involve the installation of Wi-Fi hotspots and offering bundled packages to customers, while regulatory constraints are sorted out. FMC services are expected to be offered in most Asia-Pacific markets by 2010.  In the advanced markets such as South Korea and Japan, service providers are expected to focus on providing innovative VAS over the unified network.
In spite of the ambiguity about the scope of VAS that may be offered in the converged space, the FMC ecosystem provides an opportunity for service providers to create innovative and sustainable blue ocean-like services.
FMC ecosystem in Asia-Pacific
In Asia-Pacific, the FMC ecosystem consists of a small number of service providers scattered across a highly skewed telecom landscape. While a majority of the markets across Asia are gradually transitioning to IP, the availability of high quality ubiquitous telecom infrastructure in advanced markets such as Japan, South Korea and Hong Kong has hastened the deployment of FMC-based services.
The FMC landscape is characterized by two distinct groups of service providers - the laggards and the trendsetters. While the trendsetters comprise a handful of service providers across the region that have deployed FMC-based services, the majority of others are the curious faithful, who are watching the developments closely and are likely to follow the trendsetters in the near future.
Regulatory readiness
While fixed and mobile networks are operated as individual silos in emerging Asia-Pacific markets, there is an increasing emphasis on tying the two together to achieve cost savings and increase ARPU (average revenue per user) levels. The regulatory bodies are taking active measures to incorporate convergence-based networks and services into the regulatory framework.
In Hong Kong, the Office of the Telecommunications Authority (OFTA) is working on updating its regulatory approach to include FMC services. It has identified key issues such as interconnection charging mechanism, local access charge (LAC), number portability, and number plan, and has released a consultation paper which explores these areas in the FMC environment.
In South Korea, the Ministry of Information and Communication Republic of Korea (MIC) has worked out a regulatory framework for FMC services. The regulations do not allow the market leader, Korea Telecom (KT), to offer discounts on its fixed-line service till mid-2007 or work out a unified bill to customers.
The Japanese regulator, the Ministry of Internal Affairs and Communications has launched the ‘New Competition Promotion Program 2010’ to facilitate a transition to the IP-based framework.
There is growing pressure on governments to firm-up the regulatory framework to incorporate FMC. As a first step in this direction, a number of public Wi-Fi hotspots are
being established.
Market trends
With the exception of a few advanced markets such as Japan and South Korea, there have been hardly any FMC deployments in the region. However, a majority of service providers across the region are migrating to an IP-based framework to facilitate faster deployment of services and achieve cost savings.
As a first step to achieving convergence, service providers in developing markets such as China, India and the Philippines, are upgrading their broadband and wireless networks to handle the ever-increasing traffic and achieve faster download speeds. An enhanced network infrastructure would lay a solid platform for FMC.
In the FMC space, the key focus of service providers is on feature-rich data services. The contribution of value-added services (VAS) is increasing steadily and is expected to form a major portion of FMC revenues in the near future.
Even as the FMC services market gains traction, the go-to-market strategy of service providers would be to provide a variety of FMC-compliant dual-mode handsets to customers. People in the age group of 15 to 30, which includes college students and professionals, are likely to be the key target segment for service providers.
Market drivers
• Increasing demand for enhanced voice and multimedia services
• Need for simple and cost-effective enterprise solutions
• Rapidly growing economies across the region have facilitated enhanced lifestyles
• Increasing emphasis on mobility and ‘always on’ services
• Exponential fixed-line, broadband and mobile subscriber growth in the region
• FMC has found favor among service providers who are exploring new revenue streams, increase ARPU, and achieve cost savings
• Leading service providers across the region recognize FMC as a key growth strategy
Market Barriers
• Perceived complexity of FMC service
• Fixed and mobile networks still exist as independent silos in various Asia-Pacific markets
• Highly variable and skewed fixedline,broadband and mobile penetration rates across the region, leading to varied growth strategies
• Lack of dual-mode handsets
• QoS concerns in the FMC space
The writer is Director of Telecoms (Asia-Pacific), Frost & Sullivan.
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