Table of Contents

Executive summary ............................................................................................................................... 6

1. Introduction ..................................................................................................................................... 12

2. General industry trends................................................................................................................... 14

2.1 Industry convergence............................................................................................................... 14

2.2 The three battlefields around the end-user ............................................................................ 15

2.3 Fixed mobile internet convergence......................................................................................... 16

2.4 Key drivers of market growth .................................................................................................. 21

3. The disruptive impact of SIP and VoIP........................................................................................... 23

3.1 The SIP Paradigm shift ............................................................................................................. 23

3.2 Strategic value of SIP-based market propositions................................................................. 26

3.3 Classification of existing VoIP players ................................................................................... 31

3.4 VoIP terminal equipment developments................................................................................. 33

3.5 The battle for in-building and metropolitan minutes ............................................................. 34

3.6 SIP and IMS ............................................................................................................................... 37

4. VoIP and FMIC implementation challenges and development phases........................................ 42

4.1 Connecting the VoIP Islands.................................................................................................... 42

4.2 Providing seamless access and roaming............................................................................... 45

4.3 Straightening out the pending SIP implementation issues................................................... 49

4.4 Keeping it stupid simple for the end-user .............................................................................. 53

4.5 FMIC development phases....................................................................................................... 55

5. Generic service provider strategies ............................................................................................... 57

5.1 Market developments by product category ............................................................................ 57

5.2 Strategic positioning on the multi-product chessboard........................................................ 58

5.3 Matching the needs of different market segments................................................................. 64

6. Developments in the Dutch communications market ................................................................... 66

6.1 Shifts in access and traffic patterns........................................................................................ 66

6.2 Broadband internet access and Wi-Fi penetration................................................................. 67

6.3 VoIP penetration....................................................................................................................... 68

6.4 Fixed mobile internet convergence......................................................................................... 69

Appendix: Acronyms.......................................................................................................................... 71

Table of Figures

Figure 1: Convergence of telecom, IT and media industries............................................................ 14

Figure 2: The three battlefields of convergence................................................................................ 15

Figure 3: Fixed Mobile Internet Convergence.................................................................................... 18

Figure 4: Voice and data access battlefields. .................................................................................... 19

Figure 5: Key drivers of market growth.............................................................................................. 22

Figure 6: Internet versus traditional telephony technology. ............................................................ 24

Figure 7: Application of the Five Forces Model to describe the changing structure of the

communication services market......................................................................................................... 27

Figure 8: VoIP enabled service functionality. .................................................................................... 29

Figure 9: Strategic value of various SIP-based market propositions.............................................. 30

Figure 10: Categories of VoIP service providers in the consumer and SoHo market.................... 31

Figure 11: Pure VoIP and dual mode Wi-Fi/mobile handset development...................................... 33

Figure 12: Incentives for VoIP/Wi-Fi mobile substitution in buildings. ........................................... 35

Figure 13: European hot-spots roll-out, pricing and payment methods (Source: BroadGroup, 2004).

.............................................................................................................................................................. 36

Figure 14: High-level view on the IMS architecture........................................................................... 38

Figure 15: Internet PSTN call routing. ................................................................................................ 43

Figure 16: Alternative wireless access technologies........................................................................ 45

Figure 17: Integration challenges in the network systems architecture for an FMIC service

provider................................................................................................................................................ 47

Figure 18: Alternative approaches to the FMIC network architecture. ............................................ 49

Figure 19: The early adopter nightmare. ............................................................................................ 54

Figure 20: Proliferation of VoIP equipment alternatives................................................................... 54

Figure 21: FMIC industry roadmap for the consumer and SME markets. ....................................... 56

Figure 22: Characteristics of different service propositions in the converging telecom, IT and

media market. ...................................................................................................................................... 58

Figure 23: The strategic chessboard with the core market (current positions) and market extension

options of different type of players in the converging ICT and media market. .............................. 59

Figure 24: Distribution of total revenue from fixed and mobile telephony, broadband internet

access and cable television among the different type of players in the Dutch market. ................ 60

Figure 25: Shifts in subscriptions, traffic and revenue volumes in the Dutch telecom market over

the period 2002-2005........................................................................................................................... 67

Figure 26: Historic and projected penetration of broadband internet access and Wi-Fi. .............. 67

Figure 27: Dutch fixed consumer telephony access market by year-end 2005. ............................. 68

Figure 28: Comparison of various broadband internet access and fixed telephony alternatives in

terms of bandwidth (top graph) and total cost for a household with an average call pattern (bottom

graph)................................................................................................................................................... 69