Pondering the business of FMC

It's not a question of whether Verizon follows Sprint and T-Mobile down the fixed/mobile convergence path, it's just a question of when and how, according to Mark Wegleitner, chief technology officer for Verizon.

Speaking at Telephony LIVE in Dallas, Wegleitner said Verizon is waiting to see which technology — the femtocells backed by Sprint or the dual-mode Wi-Fi advocated by T-Mobile — produces the most solid FMC platform. Verizon, he said, is waiting for “the economies to shake out.”

AT&T and Verizon, however, might have a bigger question to answer than which technology to choose: Each has to figure out a business model to adopt. Unlike Sprint and T-Mobile, AT&T and Verizon both have huge wireline voice businesses that an FMC launch could cannibalize. The most aggressive FMC player, T-Mobile, is focusing its unlicensed mobile access service as a voice wireline replacement, effectively using a cable operator's modem or incumbent telic's DBL line as a dumb pipe for the unified voice service.

Such an approach would be anathema to AT&T and Verizon because both count on revenues from their wireline and wireless voice services, said Ranjan Mishra, a director for strategic consulting firm Oliver Wyman. But those two operators have very little choice, Mishra added. Wireline/wireless convergence has officially begun, and AT&T and Verizon will have to figure out a way to make it work within their business models or be left behind.

“Carriers will have to blur the lines between wireline and wireless,” Mishra said. “Instead of selling wireless voice and wireline data, carriers perhaps need to sell only voice as a single service and then build enhanced services on top of it.”

That may be a hard pill to swallow for an operator accustomed to segmenting services and then bundling them for customers, but the trend began long before FMC. Local voice and long-distance lost their distinction several years ago even though they are implied separately in terms like “triple play.” Maybe it's time to reverse that marketing trend, Mishra said, and instead of focusing on individual services, bind those elements inextricably together.