2007 will see telecoms service providers increasingly offering fixed-mobile convergence (FMC) services, industry experts have predicted.

"FMC will drive the adoption of next-generation handsets, primarily dual-mode Wi-Fi/cellular handsets, which will enable users to seamlessly handover from a cellular mobile network to a Wi-Fi one and vice versa, so as to provide optimum quality of service," new research from Frost & Sullivan stated.

"This will benefit end users and carriers. Carriers can use wireless local area networks [Lans] to improve coverage inside buildings, while end users can make cheaper voice calls by connecting to the wireless Lan."

According to the analyst firm's latest report, the main advantages of having wireless Lan capabilities in a dual-mode device is to run high bandwidth data applications.

With the evolution of HSDPA in 2006, cellular carriers are able to get throughputs in the range of 1.8Mbps to 3.6Mbps, which will increase to 14.4Mbps in 2007. This will practically meet the requirements of an average user.

Presently, the variety of dual-mode handsets available from different terminal vendors in the commercial market is limited, the report cautioned.

Moreover, such devices are expensive in comparison to their GSM counterparts so dual-mode handsets will need to be priced low to achieve high-scale adoption.

Frost & Sullivan's report notes that, in April 2006 Ofcom granted UK GSM spectrum licenses to 12 carriers in the digital enhanced cordless telecommunications Guard Bands of 1781.7-1785MHz, paired with the 1876.7-1880MHz bands.

Due to the regulation of power emission levels by Ofcom, the coverage and performance of such GSM licences will be similar to that of Wi-Fi, and the spectrum licence will be primarily used for indoor coverage at homes and enterprises.

However, while users will need a dual-mode handset for Wi-Fi, these low-power licences can work on cheaper GSM handsets.

If this proves successful in the UK, the trend will gain acceptance in other parts of Europe, Frost & Sullivan predicted.

A key issue facing the industry today is the lack of perceived return-on-investment by deploying FMC solutions. Many carriers rightly argue that investing in infrastructure and systems to offer converged solutions may not provide adequate payback.

"This belief is further reinforced by the fact that several mobile carriers that had invested substantially in 3G deployments and licences faced low customer adoption for their services due to the poor performance of 3G technology," the research stated.

"Besides, developing FMC services can be time-consuming and costly because of the diverse technologies and protocols used in different networks."

Frost & Sullivan expects that carriers will need to adapt to end user demands for attractive bundles and focus on increasing customer loyalty as an important objective, along with increasing revenues.

Operators with the capabilities to offer FMC services need to create attractive value propositions develop awareness of their services and provide customer support.