Smooth operators
With the mobile giants moving in, comms players examine what convergence means for the channel
Little more than one month into the year it seems that mobile is the watchword for the comms channel in 2011. Two large network operators - O2 and Vodafone - have already made landmark announcements that bring them closer to the fixed voice and data channels.
With carriers converging and end users looking to collapse supply chains, the days of mobile and fixed-line voice being seen as siloed applications seem numbered. But what might all this consolidation mean for the channel?
Vodafone's recently announced union with Gamma Telecom represents one of the largest moves a mobile operator has made into the fixed-line space. But the nature of the deal may have surprised some.
For the past 18 months, both O2 and Vodafone have been widely expected to splash the cash on an acquisition in the fixed-voice channel. Market watchers such as Clearwater Corporate Finance have long been predicting that one of the mobile giants might look to make an audacious swoop for Daisy, or a similarly ambitious SMB comms player.
Tricky tie-ups
Rob Davis, Gamma's senior product manager for mobile, claimed the intricacies of the Vodafone tie-up meant it was liable to remain a unique arrangement in the comms channel. "I do not know whether we will see more of these kind of partnerships," he said.
"They are inherently complex in their nature. Systems need to be put in place in a way that is not going to affect the network," said Davis.
The deal will be hugely beneficial for both parties, he claimed, letting Gamma and its partners in on a highly lucrative market while boosting Vodafone's presence in the SMB arena.
"The mobile market in the UK among SMBs is large and growing; they spend more than £2bn a year," explained Davis. "We have a strong presence in the channel and access to the SME market. We provide a valuable channel to market for [Vodafone]."
Recent figures from Infonetics Research reveal just how large the mobile opportunity is. Within three years, the worldwide mobile services market is projected to grow to an annual worth of $870bn (£550bn).
Mobile broadband will be the market's star performer, with sales in the 2009 to 2014 period set to enjoy a 25 per cent compound annual growth rate. For the first time last year, mobile internet subscribers outnumbered those subscribing to fixed services. More than a quarter of the world's population will use mobile broadband by 2014, says Infonetics.
But Stéphane Téral, the market watcher's principal analyst for mobile and FMC infrastructure, warned that major carriers ignore voice at their peril.
"Mobile broadband and mobile messaging service revenues are growing rapidly and will help operators offset declining voice revenues, but voice service is not going away any time soon," he added. "In fact, voice will still account for almost 60 per cent of the mobile pie in 2014."
Ian Kilpatrick (pictured), chairman of distributor Wick Hill, believes employees remain "more mobile than their mobiles", and technologies such as fixed-mobile convergence (FMC) are still relatively immature.
"There are issues in making sure that FMC happens securely and in a
cost-effective way," explained Kilpatrick. "This is both a challenge and opportunity."
Upwardly mobile
With the fixed and mobile channels converging at all levels, Glyn Owen, portfolio manager at Damovo, is one of many to question whether singularly focused providers have a future.
"The increase in mobility in the enterprise certainly puts mobile operators in a strong position, but it is increasingly difficult to see just pure fixed or pure mobile," he added.
"The increasing use of SIP trunks is yet another new dimension that is bringing another player - the service provider - into the operator mix."
Owen also stressed that conver gence is far from limited to just the voice world. Channel players must always look at the wider context of end users' technology needs, he explained.
"Considering the impact on the channel, I think we need to look at a wider picture. With the rapid rise of mobility in the enterprise, seen through a huge growth in smartphones and tablet computing, we are seeing a seismic shift in mobile communications," said Owen.
"Voice communications in isolation are limiting not only the opportunity but the reality. We have to consider voice, and indeed FMC, as part of the bigger unified communications picture and, in turn, unified comms as a part of a much bigger enterprise mobility landscape."