Thursday, May 15, 2008

Another fixed line operator drops mobile

Yesterday, the Embarq CFO said that the company may drop its wireless service in 2009, handing subscribers back to its MVNO partner Sprint.

Embarq is the spin-out of Sprint’s original fixed line business. As part of the deal, Embarq developed an MVNO relationship with its former parent.

Embarq was one of the first to develop a dual-mode CDMA/Wi-Fi service. The service was announced by former FMC technology provider NewStep Networks.

In the article, Embarq said their original target was for 1 million mobile subscribers, but had achieved just over 100,000. I can only imagine what fraction of those subscribers actually chose the NewStep/FMC service. Suffice it to say, it’s hard for fixed operators to sell mobile services in general, let alone dual-mode services.

I have written in the past about the problems with fixed line operators developing dual-mode services. The problems aren’t technical. It’s possible to make a phone hand-over between fixed and mobile networks.

The problem is that dual-mode services are fundamentally about Fixed-to-Mobile Substitution (FMS). Yet that’s exactly the opposite of what a fixed operator wants. Fixed operators need MFS solutions, or a way to put mobile minutes back onto the fixed network. That is contrary to what consumers expect today.

Dual-mode services from fixed operators are always going to be challenging.

Note: I found a link to this article from another FMC company focused on fixed line operators. I think this company is actually gone now too.

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