The worldwide market for converged fixed-to-mobile networks is forecast to grow from around $US2 billion in 1999 to more than $US35 billion in 2005, research company Ovum has claimed.
According to Ovum's report, Fixed Mobile Convergence: service integration and substitution, operators are recommended to embrace convergence of fixed and mobile networks. As voice becomes a commodity product, mobile operators are urged to focus on substitution in order to differentiate their services, reduce churn and retain high revenue generating subscribers.
John Davison, principal analyst at Ovum, said: "More people are adopting mobile. More voice traffic is being substituted from fixed to mobile networks as technological advancements such as improvements in speech quality and increases in network capacity make mobile a realistic substitute for fixed."
According to Ovum, the market for convergence is being driven by new entrants who position themselves as having a single organisation for both mobile and fixed services.
"In contrast, incumbent operators have regulatory barriers that restrict their capability to integrate services and operations," he said.
Ovum also forecasts that substitution service revenues will overtake fixed service revenues in the second half of the next decade, reaching $US162 billion worldwide by 2005.