Many market trends and business drivers are pushing fixed mobile convergence (FMC) solutions that enable seamless handoff of calls--and call features--across wireline (Wi-Fi or 802.11) and wireless (cellular) networks to become a reality, today. A key question is who will be the earlier adopters--wireline or wireless carriers? Several factors are leading to one answer: wireline carriers serving enterprise customers.

Wireline carriers are highly motivated to use FMC to reverse their loss of voice-service minutes and revenue to cellular providers. Instat reported in 2004 that more than 14.4 percent of total wireline usage has been lost to cellular, and the trend is continuing. An estimated 30 percent of business calls are received on cell phones--even though the subscriber is typically less than six feet from a wireline phone and pays up to four times more for cell phone than for wireline minutes.

If wireless carriers grow unchecked, in the worst-case scenario, wireline carriers could risk losing their customer base entirely and becoming nothing more than wholesalers of high-bandwidth pipes to wireless carriers and businesses. And with wireless carriers racing to use wireless 3G and 4G technologies as solutions to provide last-mile voice, data, and video, they could squeeze wireline carriers out of business entirely. To avoid this, wireline carriers must act now to become the brand, not just the pipe, for wireless services.

FMC solutions available today enable wireline carriers to recapture lost revenue and subscribers by extending mobility into the enterprise while keeping wireless minutes on the wireline network. These solutions use dual-mode handsets to seamlessly roam between Wi-Fi and cellular networks and provide users with one set of business telephony features, one phone number, and one user interface. This is true whatever the access mode--the enterprise Wireless LAN (WLAN), Wi-Fi hotspots, or cellular. FMC allows wireline carriers to retain control of the call and of their brand, turning the wireless infrastructure into a pipeline for mobile services.

The enterprise: A natural market for FMC service

Mobile operators are also interested in FMC, as it lets them expand services into the landline space while maintaining control of the call. However, it appears that wireline carriers will be the early adopters of FMC--and thus gain a competitive edge over mobile operators. Wireline carriers not only have the largest incentive to be earlier adopters, but also control the channel to the enterprise. And the enterprise looks to be the first and most important market for converged wireline/mobile service.

There are several reasons for making this assumption. First and most simply is cost. Today's FMC dual-mode IP handsets have a PDA form factor and typically cost $500 to $1000--other form factors are not yet available. It would be difficult for most consumers to justify the cost of such a handset, but the benefits enterprises receive from convergence--of landline and mobile networks and of voice and data services--on one handset can outweigh the cost. Enterprises can take advantage of the handset's PDA form factor and PDA applications and even use the handset to replace existing devices such as cell phones and Blackberries. In a specialized vertical market such as healthcare, for example, the utility of FMC's mobile voice and data functionality would enable doctors in an emergency room to use one handset to pull up patient records, access lists of on-call specialists such as orthopedic surgeons or respiratory therapists, call the appropriate specialists, and tell them where to meet.

The aging base of PBX and key systems will also make enterprises early adopters of FMC services. Many enterprises replaced these systems in the years leading up to Y2K, and as they become fully depreciated, enterprises are considering their product replacement options. FMC is particularly attractive because it is a hosted service, which lowers capital expenses, and enterprises are increasingly outsourcing services that are not part of their core competency. The fact that the handoff between mobile and fixed services is better handled via a hosted service makes FMC more attractive to wireline carriers, since selling hosted services increases revenues.

Wireline carriers are the natural suppliers of FMC services because they already 'own' the relationship with enterprise customers. Because consumers purchase approximately 95 percent of wireless phones, most mobile carriers simply do not have enterprise sales channels. Nor do mobile carriers have as great an incentive as wireline carriers to offer FMC services. Consumers are unlikely to be early adopters, since existing low-cost calling plans give them little incentive to switch to a new service. Consumers will also find the quality of calls from hotspots at coffee shops, airports, and other locations to be poor, since most hotspots are not set up to support reliable Voice over Wi-Fi and have little incentive to implement it. Finally, many wireless carriers are leery of implementing FMC solutions. They still see Wi-Fi as a threat, not an opportunity, because they fear losing service revenue to other carriers that operate over unlicensed bandwidth.

Wireless FMC approaches

FMC solutions employ different technologies and architectures aimed at different markets. One approach to FMC is Unlicensed Mobile Access (UMA) technology, developed to provide access to GSM and GPRS mobile services over unlicensed spectrum technologies, including Bluetooth and 802.11. UMA-based solutions enable subscribers with dual-mode UMA handsets to roam between cellular networks and unlicensed wireless networks. A UMA Network Controller (UNC) acts as a virtual base station, providing handoff between cellular and Wi-Fi networks.

UMA-based solutions are aimed at cellular operators with a consumer focus. The UNC is paired with a mobile switching center (MSC) in the cellular carrier's network; the MSC maintains control of the call even when the subscriber roams onto the WLAN network. While UMA solutions extend coverage into the WLAN, the UNC does not provide any integration with enterprise-level features such as call hunting, transfer, or conferencing, nor can users take advantage of any of their WLAN's enterprise features. Also, there is no guarantee that consumers will be able to use UMA handsets on their corporate WLANs when they roam into their office, further limiting the usefulness of UMA-based solutions. Because the UNC stays in control of the MSC, the wireless carrier retains control of the call. UMA-based solutions offer no benefit to wireline carriers, which merely provide the pipeline for the WLAN when the user is on that network.

Other FMC solutions aimed at the cellular market peer with cellular networks via either a virtual MSC or an offline Home Location Registry (HLR). The HLR has an SS7 interface to the cellular network, a PRI interface to the MSC, and an IP interface that can connect a call from a SIP-enabled cell phone when it is on a WLAN. Again, cellular features are the basis for the service, and again the wireline operator is relegated to the role of pipeline provider, not a provider of branded services. And because vendors typically do not offer PBX-type features, and wireless carriers typically do not offer enterprise feature sets, these wireless-centric, SIP-based solutions are not oriented to the needs of enterprises.

Wireline solutions based on open standards

FMC solutions aimed at wireline operators take an opposite approach from those aimed at wireless providers--they enable the wireline carrier to maintain control of the call when the subscriber is on a WLAN network. Wireline-oriented solutions also extend enterprise features onto the cellular network, so that subscribers' mobile phones act as extensions to their business telephony systems both inside and outside the enterprise. Calls only go onto the wireless provider's network, which acts as a wireless pipe, as a last resort.

Wireline-oriented FMC solutions are based on SIP standards, which are easy to integrate with third-party SIP-based applications already widely used with wireline carriers and in enterprises, such as push-to-talk, presence based services, voicemail, and unified messaging. Enterprises can also adapt their existing IP applications to make them available over the converged network.

Such FMC solutions also extend, without any changes, to cellular providers' networks. Subscribers roaming onto a cellular 2.5G network can take advantage of FMC applications. The cellular provider does not need to modify its network to allow the subscriber access to services. In addition, carriers that deploy an FMC solution with 2.5G networks today can seamlessly migrate to 3G or 3GPP networks in the future. The FMC application server can even act as an application server behind the IP Multimedia Subsystem (IMS). With this approach, a single dual-mode Wi-Fi/cellular handset allows subscribers to communicate via cellular and Wi-Fi networks, and maintain access to all of their enterprise features (see figure below). Subscribers thus have the advantage of requiring only one handset, one number, one dialing plan, and one voicemail box for all types of communications.

Client software on the handset monitors the signal strength of both Wi-Fi and cellular networks and signals the application server which network is most suitable for a call. When each network offers a strong connection, the application has a bias towards Wi-Fi. The client software also serves as a fully functional IP phone that can take advantage of most business features hosted in the application server. Users can roam seamlessly between the enterprise's fixed Wireless LAN (WLAN) and the cellular network; the handset communicates directly with the FMC application server, which passes calls on to the IP network as Voice over Wi-Fi calls or to the cellular network as appropriate. With its bias towards Wi-Fi and the enterprise WLAN, the handset enables significant savings in calling costs.

SIP-based FMC solutions can also enable secure links from mobile FMC handsets used in enterprise FMC networks to the FMC server via integrated VPN and firewall applications. Lack of security is a major issue with voice over Wi-Fi in the consumer market, and many of the alternative solutions have yet to address these issues.

Benefits of the wireline FMC business model

Wireline carriers without wireless assets are expected to be the early implementers of FMC hosted service, since it will allow them to offer branded wireless services that compete head-on with wireless carriers and recapture lost minutes and subscribers. To offer services, wireline carriers will typically enter into Mobile Virtual Network Operator (MVNO) agreements with wireless carriers that allow them to resell cellular minutes when the subscriber is out of range of a WLAN network. Such an agreement lets wireline carriers maintain their brand, while making the cellular provider a wireless pipe. Cellular providers enter MVNO agreements because either they see a value in bringing subscribers onto their networks via wholesaling arrangements, or they are tier 2 or 3 cellular providers that see wholesaling as a way to gain subscribers and to compete with the tier 1 wireless provider in their market.

With the right FMC architecture and an MVNO agreement, wireline carriers will be in an excellent position to capture enterprise customers with a service that offers a number of unique benefits. Managed FMC services improve user mobility and productivity, providing each user with one phone, one number, one voicemail, one directory, and one bill, as well as full, consistent features across multi-site enterprises and between both wireline and wireless networks. Managed FMC services significantly reduce capital expenses per user and total cost of ownership. Outsourcing telephone services makes it easier to predict expenses, reduces the number of networks the enterprise needs to manage, helps control costs via least-cost routing over IP, and supports teleworkers and traveling employees by giving them access to enterprise telephony features no matter where they are. Finally, FMC gives enterprises an easy migration path to full voice over IP and even PBX replacement.

FMC services will help wireline carriers reverse the loss of business to cellular carriers by offering a more attractive wireless service. Wireline carriers can create a stronger bond with new and existing customers by offering a wide range of highly differentiated and 'sticky' FMC branded services that are extensible with other SIP-based applications. An FMC solution that communicates with cellular networks, Wi-Fi hotspots, and the enterprise WLAN lets wireline carriers capture wireless minutes no matter where the subscriber roams. The combination of fees from fixed and mobile services and from PBX replacement can increase average revenue per user by as much as a factor of four, which creates a great incentive for carriers to offer these services. With so many benefits, wireline carriers and their enterprise customers will drive early rollout of FMC services.

David Schwartz is Director of Marketing for LongBoard Inc.