Can MVNOs help FMC Succeed?

Venture capital has poured hundreds of millions of dollars into companies building equipment to enable FMC (fixed-to-mobile convergence) products and services. To date, the cellular operator market opportunity has languished but the tide may be changing if the MVNOs take advantage of the technology.

FMC, among other things, allows your dual-mode mobile phone to seamlessly transfer a call between a cellular network and a Wi-Fi network using VoIP. The FMC advantages are that you get to use your dual-mode mobile phone in places where Wi-Fi coverage may be better than your provider’s cellular coverage, such as your home or office (although supporting VoIP over Wi-Fi will have its technical challenges as well).

The Wi-Fi coverage may encourage you to stay with your current cellular operator and that, of course, is also the main advantage to them. Or is it? Truthfully, I’m not convinced that the cellular operators really want to give the consumers more connectivity choices from their mobile phones. Once you’ve made the leap off their cellular infrastructure using onto VoIP over WiFi, it’s a pretty short hop to Skype.

So, if the cellular operators aren’t pushing it because they are worried about cannibalizing their own revenues, who really wants FMC? It appears to be the MVNOs.

Using FMC they can lure their customers off the cellular operators’ infrastructure, where their operating margins are razor-thin, and onto their own VoIP-enabled infrastructure. An MVNO can offer a wealth of profitable services without relying on the cellular networks. As an example, Embarq, an MVNO reselling Sprint’s cellular service, is offering some services based on FMC today. And T-Mobile appears to be readying an FMC-based service for deployment soon as well.

So, do the venture investments into FMC begin to pay off over the next year or so? If enough MVNOs can survive and not suffer ESPN Mobile’s fate, then maybe there will be a decent return on the investments. Personally, I’m getting ready to check out the latest dual-mode mobile phones and the MVNO service plans. Given the coverage at my house, my cellular operator is now officially on notice.