When mobile meets the landline

The merging of fixed-line and mobile phone services promises to address the desire of businesses to simplify their communications and reduce costs. Anthony Plewes investigates the services available today and asks whether functionality alone is enough to persuade SMEs to switch.

Complexity is causing half of small and medium-sized businesses to recognise they need to change the way they manage their communications. According to a recent survey from the Bathwick Group and silicon.com, they are either looking for a single supplier, want to find a more effective way of managing their comms or are ready to take advantage of new services and applications. (Read the full research results and watch the video with analyst Jonathan Steel on whether companies want unified communications.)

Operators are not blind to the demand. Europe's giants have been beavering away at combined fixed-line and mobile services - commonly known as fixed-mobile convergence (FMC) - which could remove many of these headaches, while also reducing the number of supplier relationships that need to be managed.

The first wave of FMC solutions have combined GSM and fixed telephony in a single device. The promise is lower calling costs and new functionality such as unified messaging. Unfortunately, early service launches have been disappointing.

Unlicensed mobile access

The vast majority of current FMC services in Europe are based on the unlicensed mobile access (UMA) standard, which allows mobile calls to be carried over a fixed broadband connection. In plain English, a GSM phone will use a wi-fi or Bluetooth internet connection when in range of an access point, and GSM when outside. Calls over the internet connection are tunnelled back to the mobile operator's network.

More on converged communications and SMEs

♦ Research report
Read the full analysis of research into converged communications conducted by The Bathwick Group and silicon.com

♦ Video with Jonathan Steel
Watch a video interview with The Bathwick Group analyst Jonathan Steel discussing SMEs' use of communications technologies

The first major launch was BT's Fusion service in 2005, which placed a Bluetooth base station in a customer's home. A useful feature is that calls can be switched between GSM and Bluetooth in the middle of a call. Calls that are transported over the fixed network are charged at a lower rate than those over GSM. While Fusion is primarily targeted at home users, it is also of interest to very small businesses. Up to six handsets can be connected to the Fusion hub, although Bluetooth's limited capacity only allows three to communicate simultaneously.

The selling points of Fusion are that you only need one handset, one number and yet you get a lower bill than if you chose to go 'mobile-only'. It seems an attractive proposition, yet with reportedly just 30,000 users per year after launch, Fusion appears to be off-target. This is surprising considering that 40 per cent of respondents in the Bathwick Group/silicon.com survey said a system that automatically finds the cheapest route for a call wherever they are is 'very valuable'. (Read the full research results.)

Emma Mohr-McClune, senior analyst at Current Analysis, says: "The industry as a whole is disappointed in BT Fusion's lack of success. There are no regulatory hurdles that BT needed to jump, so if an FMC service was going to work anywhere it was going to work in the UK. I think operators are going to find these solutions a harder sell than they hoped."

Wi-fi strides where Bluetooth creeps

Despite BT's difficulties with Fusion, operators in other countries have not been deterred from using UMA - though they have ditched Bluetooth in favour of wi-fi. In August TeliaSonera launched Home Free Mobile IP in Denmark, which is pitched as an IP phone for the home. And in September Orange announced Unique, a FMC handset that works with the LiveBox home gateway and will be available initially in France but with the UK soon to follow. Both Orange's and TeliaSonera's services use the UMA standard with dual-mode GSM and wi-fi handsets.

Fixed-mobile convergence is an attempt to counter the trend where customers are choosing to have only a mobile phone - and no landline connection. But can these two operators succeed where BT so far hasn't? It's not going to be easy for service providers to attract customers on cost alone because the differences between fixed and mobile tariffs have fallen dramatically in recent years.

What's more, mobile operators have made pricing and bundling into an art form. An example is the home zone solutions seen in Germany and Italy. Users keep their GSM handset, nominate a home cell and when in this cell, inbound and outbound call rates are priced at or below equivalent fixed-line rates. Some home zone services even provide users with a fixed line number - so that to the caller it looks as if they are calling a fixed line with fixed rates, when in fact the entire call is handled through GSM.

Businesses want more

Home zoning and Bluetooth-based FMC solutions are not sufficiently scalable to be of interest to all but the smallest businesses. Any business larger than around 10 people needs a wi-fi-based UMA solution. Wi-fi can support many more calls and its longer range means less access points are needed than Bluetooth. (Watch the video with analyst Jonathan Steel on how communications are viewed differently in businesses of varying size.)

Current Analysis' Mohr-McClune says: "Enterprise FMC is a completely different beast to consumer FMC. Most of the currently available UMA solutions have been designed with the consumer in mind. Businesses have different priorities: they need reliable services which can leverage their PBX investments and offer high voice quality. Enterprise FMC cannot be off-the-shelf, it requires professional services and a wide range of companies to deliver the end product."

One of the reasons professional services are an important component of enterprise FMC is because wi-fi is not a natural bedfellow of voice. This is because there is no obvious way to ensure voice quality of service over wi-fi so high volumes of data traffic could disrupt voice calls. Better network planning appears to be the only way around this.

Rakesh Mahajan, global director of mobility for BT Global Services, says: "QoS [quality of service] issues can be alleviated with better access point layout. The access points need to be closer together [than the existing wi-fi set-up] and will also need to cover areas that typically aren't covered in data-centric networks such as hallways and stairwells."

Mahajan reckons a typical wi-fi network will need 25 to 40 per cent more access points to reach the required density. This investment in good wi-fi coverage will help businesses overcome any existing issues of in-building mobile phone coverage black-spots.

Making the enterprise grade

In early 2007, BT plans to launch a corporate version of Fusion which integrates the customer's PBX with an FMC server that handles call control. Corporate Fusion offers seamless handover between GSM and wi-fi with dual mode handsets from as-yet unidentified suppliers.

BT is wrapping up the offering in a professional services bundle that will help businesses tune their wi-fi networks for voice and make sure that everything works. BT's Mahajan says: "The integration of the PBX and FMC provides features like access to the corporate directory on the mobile phone and unified messaging and, in the longer term, presence functionality."

Orange will launch an enterprise version of its FMC solution, Unique, in 2007 too. To differentiate it from the consumer version, it will offer higher service levels and better tariffs.

Jason Ellis, head of convergence at Orange Business Services UK, says: "Businesses demand a higher level of service, so we will be providing a better service environment. We will also be developing the tariffs to make it work for businesses, such as providing unlimited calls between employees."

Ellis says Unique is targeted at the smaller end of SMEs. Larger enterprises will have to wait until the end of 2007 for a new solution built around the standards SIP (Session Initiation Protocol) and IMS (IP Multimedia Subsystem), rather than UMA.

The next generation of convergence

SIP-based fixed-mobile convergence dispenses with the need to route calls back through the mobile operator's network. This instantly gives fixed-line operators more room to manoeuvre.

SIP FMC services are already appearing on the market. In France, alternative carrier Neuf Cegetel launched Twin in May 2006, which uses a SIP client in a dual-mode handset that it is selling along with the service. And in August, Deutsche Telekom subsidiary T-Com launched the SIP-based One Phone in Germany. Unlike the UMA-based FMC services mentioned before, neither Twin nor One Phone will offer seamless handover or a single number but because they use SIP, the user can theoretically be contacted through any communications device with a SIP client, such as a softphone on a PC.

Despite the growing number of FMC services, it's still early days for the technologies involved. Companies looking to integrate their mobile services with their PBX infrastructure will need additional investment - for custom design and overhauling their existing wi-fi network. However, smaller companies with less PBX infrastructure will already be able to benefit from some of the added value FMC can bring, such as unified central address books and messaging.