The battle lines are becoming blurred in today’s telecoms market. Fixed line operators are moving into mobile operator territory with Fixed Mobile Convergence (FMC) while mobile operators are fighting to take over fixed line ground with Fixed Mobile Substitution (FMS).

FMC is the buzz of the telecoms market.  It holds the promise of making all of our lives easier by marrying the convenience of the mobile with the high quality and speed of fixed line communications. FMC joins mobile, VoIP calls and WiFi together in one simple package by connecting the mobile phone to fixed line infrastructure. It allows the user to make calls on their mobile phone at a reduced rate in the vicinity of their “home base station”. This home base station acts as the link between the handset and the outside world, routing calls through a landline or a broadband connection rather than using a mobile network.

Fixed line operators recognise that the future is mobile and are already feeling the effect of declining fixed line usage. They are keen to offer alternative services such as FMC to maintain market position and drive much needed revenues. But so far, FMC has not delivered on its promises. In many cases FMC offerings are pure marketing bundles where various services are offered from a single provider with a single bill.

Early attempts to move beyond marketing bundles have had limited success.  BT Fusion, one of the first FMC offerings in the market, suffered from low take up rates. The service was not convenient for end-users, requiring the installation of a box in the home and a specific new handset.  It was confusing for non-technical end-users and handset availability was limited. In the end BT admitted that it made a mistake with its maiden FMC service.

For FMC to be a reality new handsets are required, flat rate data tariffs need to be introduced and a full IP subsystem has to be developed from the operator’s main control all the way to the handset.  The costs and time involved are pushing the reality of FMC a number of years into the future.

Mobile operators have an immediate advantage in the FMC battleground with FMS.  FMS offerings entice subscribers towards a “one handset” solution, transferring fixed line usage to mobile and driving increased revenue for mobile operators.  It is an opportunity that is too attractive for mobile operators to ignore. And with FMC looming over the distant horizon they must move quickly to maximise the opportunity available with FMS.

A growing number of European operators have woken up to the threat of FMC and are accelerating FMS through HomeZone services. HomeZones are based on location technology that detects when a subscriber is within a specific area. With this information operators can charge different tariffs based on subscriber location. At home mobile subscribers are charged a fixed line tariff and while out and about they are charged the mobile tariff. This enables mobile operators to compete with fixed line offerings and stimulate traffic while protecting mobility premiums and boosting ARPU.

HomeZones also work well for emerging markets, such as Eastern Europe, where fixed line infrastructure is not so prevalentand where obtaining a fixed line service can take months. In these countries mobile operators are taking FMS one step further, leapfrogging fixed line altogether, with “virtual fixed lines” delivered via mobile handsets and networks.

A number of technologies are being considered for the delivery of HomeZone services including GPS, Femtocells and Cell-ID.  GPS is popular amongst consumers, but falls short for HomeZone services primarily because of its very poor indoor reception. Also, in order to use GPS services end-users need to purchase a new handset, which may be a barrier to mass market adoption. 

Femtocells are a recent development and have been introduced to solve problems with poor service coverage and capacity. Femtocells are small cellular base stations that provide enhanced coverage at the far edge of the network. They allow mobile operators to extend service coverage inside a home without the need for expensive cellular towers and may be particularly useful in areas that experience low reception. 

While femtocells are likely to have a place in the market, they do not deliver the ultimate HomeZone solution.  To maintain coverage throughout a house with these low powered devices, operators will have to include cells located in the area near the subscriber’s home. This inevitably enlarges the coverage area beyond the designated “home area”, which is not ideal if operators want to charge users the “home tariff” only when they are at home. 

Most existing HomeZone implementations are based on Cell-ID technology, which was used because it leverages capabilities available in the operator network and works on most handsets.  Cell-ID uses the mobile phone network to locate the handset and relies on the closest base station for its position by approximating where the phone is and consequently giving a range of possibilities related to the coverage of the base station. The problem lies in the fact that a mobile phone can connect to a number of base stations within a specific area. All of these base stations need to be included in the HomeZone profile to ensure the user is identified as “in the zone” and charged the correct fixed line tariff when they are actually at home.

Students in one city in Germany have learnt how to exploit this gap in Cell-ID technology. Students are known to call customer care with complaints that the service is not providing an “in zone” status when they are at home.  On the first call, customer care agents are trained to increase the zone size by 50% and on the second call by 100%. In some cases students benefit from HomeZones that span the entire city, resulting in massive revenue cannibalisation for operators where mobile tariffs should be applied instead of the fixed line tariffs.

In order to deliver the optimal HomeZone solution fresh thinking is required. A number of operators are considering new approaches to location technology, such as SIM-based solutions, which are a readily available alternative to network, handset and home box-based solutions. 

Operators should choose the solution that will enable them to deliver a HomeZone service that is appealing to end-users and that meets the operator’s business objectives. Solutions that are best positioned to appeal to end-users are those that require minimal end-user investment and are easy to set up and use. This includes a fast and easy registration process and a visual indicator that notifies the user when they are “in the zone” and “outside the zone” so they are assured the correct tariff is being applied.  It is also important to have the flexibility to accommodate different user requirements through the delivery of different zone sizes and multiple zones (e.g. to include both an end-user’s daily home and holiday home in the HomeZone service). 

In order to fully leverage the opportunity of FMS, operators need to move quickly and therefore should look at solutions that can be deployed straight away to the maximum number of users, including both post-paid and pre-paid subscribers. The chosen solution should easily integrate with the operator network with minimal effort and support and automatically repair changes in the radio network to avoid costly and time consuming updates. It should also deliver maximum revenue potential by minimising revenue cannibalisation through the delivery of high accuracy combined with high reliability.

Finally, another key consideration when selecting a HomeZone solution is the ability to support additional location enabled services. While FMS provides the ability to increase voice traffic and revenues in the short to medium term, mobile data services offer a long term revenue generating strategy for many operators. Operators should be able to use the HomeZone location technology to introduce other innovative revenue generating services such as location enabled search and mobile marketing. 

As the telecoms battle continues to rage and intensify, mobile operators need to build and implement their battle plans quickly and arm themselves with the right solutions to win the battle today and sustain their position into the future.  HomeZones are a powerful weapon in the convergence battle, and operators need to arm themselves with the best technology to meet their objectives. While many of the existing technologies have their strengths and a place in the market, they tend to fall short for HomeZone services either because of poor indoor coverage, the need for new handsets or equipment, or the delivery of large zones that lead to massive revenue cannibalisation.

The good news is that new approaches in location technology have emerged that enable operators to deliver HomeZone services that appeal to end-users as well as meet business objectives. With all of the technological developments in the market, location is no longer the weakest link in the value chain for operators. It has become a business driver and a powerful weapon in the FMC battle, enabling operators to deliver innovative services that drive success today and into the future.