Fixed-Mobile Convergence in Latin America
In recent years there has been a growing trend of offering integrated services to consumers, through the merger of fixed networks (PSTN, DSL) and mobile networks (2G, 3G, Wi-Fi, WiMax), what we commonly call the fixed-mobile convergence (FMC). This term also includes convergence of devices and services, in order to present a universal wireless solution with seamless transition between networks.
The FMC has a value proposition for both operators as customers. Operators seek to create new revenue opportunities, reduce customer churn rate and reduce costs through economies of scope and better use of networks. Customers want to satisfy their communication needs with connection at any time, place, network, and with any device, at best price and simplicity ("one stop shop").
However, operators need to ensure that they sell a service, not a technology. Only then there will be of interest to the mass market, stressing simplicity and convenience, rather than simply technology.
The challenge is to find solutions for interoperability, roaming connectivity, joint billing for services, security and quality of service, considering that there are lots of networks and devices in the market today.
Convergence in Latin America
While trendsetter operators have already deployed fixed-mobile convergence services in developed markets such as NTTDoCoMo in Japan, KT in Korea, BT in the UK and PCCW in Hong Kong, the lack of availability of infrastructure and regulatory restraints have delayed the deployment these services in Latin America.
However, there are some initiatives of converged services in the region such as Brazil, Chile and Mexico.
Oi in Brazil and Telmex in Mexico have integrated offerings of mobile and fixed services, including broadband. But they face regulatory restrictions to offer IPTV, having to supplement the bundle with satellite TV technology (DTH).
Other examples of fixed-mobile convergence are those of TIM Brasil and Movistar Chile, which offer Wi-Fi internet services in hotspots and indoor locations, along with its 3G broadband offering, in an initiative to try to better manage 3G traffic and encourage the use of Wi-Fi whenever possible to reduce network costs and investments.
Considering the experience of the operators we can see that the main market drivers for fixed-mobile convergence in Latin America are: 1) Rapidly growing economies throughout the region with improving social conditions of the middle class; 2) Exponential growth of broadband and mobile telephony subscribers in the region; 3) Main service providers in the region recognize convergence as a key growth strategy; 4) Growing demand for mobile services “always on”; 5) Need for simple and cost-efficient business solutions.
However, there are some restraints for a larger deployment of converged services: 1) restrictive regulatory framework in the countries of Latin America, especially Brazil, Mexico and Argentina for IPTV and also regulation by technology and not by service; 2) Fixed networks remain existing as independent structures from mobile networks in several Latin American markets; 3) Perception of complexity in the service; 4) Lack of dual-mode devices and their high cost; 5) Concern with quality of service.
It is expected that new initiatives are undertaken along the integration process of fixed and mobile operations of América Móvil and Telefónica Group in the countries of the region, as well as alternative operators, such as GVT in Brazil, Telsur in Chile and Maxcom in Mexico, just to name a few.
There is a strong trend for multiple play offerings in Latin America, and the competition will focus on the best deals around "one stop shop" for each customer profile. This trend will be accelerated to the extent that regulatory restrictions in some countries are eliminated, and the solutions gain a commercial scale.
By Renato Pasquini, article published in Chilean magazine GERENCIA on April 2011 (http://www.emb.cl/gerencia)