Mallinson: Fixed-mobile convergence is back

Keith Mallinson

Fixed-mobile convergence (FMC) is a popular proposition once again, but with better prospects than a decade or two ago. Increasing video consumption on both types of telecommunications networks, as distinct from traditional terrestrial, cable and satellite broadcasting, makes FMC more likely to succeed than it did with voice services, where mobile ended up significantly substituting for fixed communications. More tightly integrated fixed and mobile will be the hallmark of future networks and services with fast, reliable and economic delivery, and upon which access to prime video content will be paramount.

False starts

FMC was all the rage with some operating companies and equipment vendors in the 1990s and early 2000s. The promise was "seamless" capabilities including "follow-me" services routing calls over converged intelligent networks with, for example, dual-mode devices that could switch from cordless fixed access using DECT technology to 2G cellular as one left the office.

But FMC never took off. Despite various attempts, wireless substitution for or pre-emption of fixed connections prevailed over any kind of integration. In my research nearly a decade ago, I discovered that mobile minutes had already exceeded fixed minutes for U.S. consumers, with extensive indoor usage. Outright mobile substitution--by "cutting the cord"--became commonplace, particularly among young adults and for those on low incomes in developed nations. In developing nations, including those reconstructing in Eastern Europe after the fall of the Soviet Union, mobile technologies were typically rolled out in preference to fixed technologies for consumer voice services because mobile was cheaper and quicker to deploy, and supply was driven by competing newcomers instead of the old PTT monopolists.

Operators including Vodafone once made a virtue of being pure-play mobile. Low-cost operators including Leap Wireless and MetroPCS in the U.S. positioned themselves as being fixed line substitutes with particularly large proportions of cord-cutters among their customers.

But times and circumstances have changed. Leap Wireless was acquired by fixed-mobile and TV distribution juggernaut AT&T, while MetroPCS was acquired by T-Mobile US, a mobile operator which has pioneered Wi-Fi-based offload for voice over many recent years. Vodafone is on a spending spree to acquire broadband and cable TV operators including Kabel Deutschland in Germany and Ono in Spain, with rumours of more deals in its sights and other such mergers brewing around Europe.

Fibres and wires as well as antennas in densification

With mobile network traffic expected by me and others to increase one thousand-fold over a decade or so from 2010, it is the compounding of several supply factors that must create the enormous additional capacity required. In 2G, each cellular site typically needed backhaul of only a few megabits per second. In 3G that increased to tens or hundreds of Mbps on similar numbers of sites. In 4G, including LTE Advanced to 2020 and beyond, there will be a tripling spectrum employed and improving radio technologies to increase spectrum efficiency six-fold, which will increase per-site backhaul demands to many gigabits per second. However, in addition, network densification with around 50 times more cell sites will also be required to satisfy the anticipated demand growth. Fixed connections become even more important because they will also be so numerous.

Fibre, copper and point-to-point microwave must be deployed most abundantly to maximize what can be squeezed out of the scarce radio spectrum. With this small cell densification in heterogeneous networks there will be a lot of data moving around the local area between basebands and the radio heads on large and small cell sites. Duplicate user traffic needs to be carried, concurrently to and from more than one cell, with some advanced interference mitigation techniques. Baseband pooling and substantially increased signalling, resulting in significant additional data communications among adjacent macro and micro sites, can also improve radio performance including quality, speeds and capacity.

There will therefore be many times more cabling in future mobile networks than was previously required for backhaul. Before long there will be more of it than in fixed networks--apart from the last 100 meters to the home. The latter will continue for many years to be ancient twisted pair buried many decades ago, as fibre goes no further than street cabinets for the majority of European households.  Nevertheless, it is fixed network players that have the assets required to build and support the dense capillarity and trunking required for mobile operators to keep up their enormous traffic growth.

Fixed networks will continue to carry an order of magnitude more traffic than mobile networks because they bear the mobile traffic as well as a whole lot more. According to Cisco's May 2013 Visual Networking Index,  2012's "mobile data traffic was nearly 18 times the size of the entire global Internet in 2000. One exabyte of traffic traversed the global Internet in 2000, and in 2013 mobile networks carried nearly 18 exabytes of traffic.  [However], globally, 45 percent of total mobile data traffic was offloaded onto the fixed network through Wi-Fi or femtocell in 2013. In 2013, 1.2 exabytes of mobile data traffic were offloaded onto the fixed network each month. Without offload, mobile data traffic would have grown 98 percent rather than 81 percent in 2013." 

That's impressive, but fixed networks so much more readily accommodate high traffic demands than mobile networks alone. With a total of 672 exabytes in 2013, all global IP traffic is 37 times that on mobile networks and 46 times more than is offloaded. On the basis of Cisco's forecasts, the difference will reduce considerably, but will still be the large multiple of 11 in 2017. That is because, while mobile video also grows substantially, wide-screen-watching coach potatoes will increasingly dominate video consumption with on-demand streams over fixed telecommunications--progressively substituting for cable, satellite and terrestrial broadcast reception.

Not content with only cables and frequencies

In response to fears of being marginalized by over-the-top content providers, fixed and mobile network operators are eager to expand business to include ownership and delivery of broadband content including video programming. For example, in the UK, BT has latterly entered the market by outbidding BSkB at a cost of £900 million (€ 1.1 billion) for the rights to air some Premiere League football. Vodafone has bundled Sky sports and Spotify music streaming with its 4G LTE offerings. Maximizing return on investment for those rights by distribution on fixed and mobile platforms is particularly attractive and may ensue as smartphones and tablets take ever-increasing shares of our viewing hours.

Competition authorities are averse to allowing national mergers among mobile operators without major concessions or at all, and pan-European mobile networks are a pipedream from Brussels. With all that, fixed-mobile consolidation, including cable, satellite and broadcast, as well as fixed telecommunications, is hoped to be the next best thing to improve lacklustre financial performance for mobile operators in Europe.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. Find WiseHarbor on Twitter @WiseHarbor.

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