Telstra, Optus 'will delay on FMC launches'

Fixed mobile convergence (FMC) -- where a single handset can switch seamlessly between making calls over cellular and Wi-Fi networks -- will give Australia's pure-play mobile operators the chance to get the jump on the likes of Telstra and Optus.

A new report by market research consultancy Telsyte expects that Australian operators are likely to begin trialling FMC within the second half of the year, with services expected to be offered commercially before the end of the decade.

However, Warren Chaisatien, managing director of Telsyte, told ZDNet Australia that he doesn't expect full-service operators such as Telstra or Optus, which provide both mobile and fixed line services, will be the first to start offering FMC products.

"I guess the situation in Australia is now hamstrung not by the technical readiness but by commercial decisions from the full service operators. They're reluctant to push FMC, I believe, because of the potential of revenue cannibalisation," he said.

By switching calls from mobile networks to VoIP when a user comes in range of their home or business hotspot, FMC users can bypass their PSTN, still a big source of revenue for Telstra, which has been vocal about its work to slow the rate of decline in that area.

Having so much staked on fixed line revenue will effectively deter the telco and its main rival from offering FMC, said Chaisatien -- leaving the door open for mobile-only players.

"I would expect Vodafone and Hutchison to be more aggressive. They have no qualms about fixed line cannibalisation ... when that happens, I would expect full service providers like Telstra have no choice but to move," he added.

Telsyte's report says Australia is falling behind in FMC, with services already rolled out in markets including the US and the UK. Telstra's British counterpart, BT, has been one of the chief cheerleaders of the technology for some time and launched its first FMC service, Fusion, in 2005.

"Telstra can learn from its counterparts overseas but if you look at BT, it's in a slightly different position with fixed line -- they no longer have a mobile arm. Their fixed line revenue is declining anyway, so it's a question of 'how can we add value?'. [BT's FMC partner] Vodafone doesn't have a fixed line arm, so they both have something to gain and nothing to lose," he said.

While Fusion has been somewhat slow to take off, it's thought to have over 50,000 customers in the UK. Telsyte expects a similar figure of FMC users to be reached in Australia by 2010, with businesses likely early adopters.