J’son & Partners Consulting presents short results of the research: Russian Market of Fixed Mobile Convergence (FMC) Services in Corporate Segment. Definition FMC – is an internal network with general numbering scheme and general calls management for stationary office and cell phones. One of the most significant tendencies on the Russian market of convergence service lately is hybrid solutions, which combine cloud telephony and mobile communication. In modern terms, FMC is defying as basic stage of Unified Communications (UC) segment’s development, which is not limited only to voice calls. UC includes wide range of services – audio-,video-, web-conferences, apps for collaboration, personal data management, multimedia apps available same in fixed and mobile networks, etc. Market Estimation, Key Drivers and Deterrents At the moment of research preparation, foreign analysts didn’t provide actual forecasts about global FMC market, probably because FMC, as a first stage of UC services, already have passed. According to IDC forecasts, global market of UC and Unified Collaboration (Unified Communications and Collaboration, UC&C) will 1.5 times increase by 2017 vs 2013 – from $19 bln. till $30 bln. Despite the long history (first FMC projects started in the first half of 2000s), convergence services segment didn’t develop in Russia fully enough. Key stones on the FMC way always have been, namely: - lack of attention to convergence services from cellular operators, which are focusing more on expansion of infrastructure due to fast growing market; - complicated cooperation between operators of mobile and fixed communications; - users’ conservatism; - imperfection of legal base etc. Meanwhile, profitability from FMC became more obvious for corporate users, than it was several years ago. Operators marked growth of demand on FMC services in crisis years, explained it by companies’ desire to save on communication services and to increase efficiency of communication. In post-crisis years (2011-2013), yearly growth rates of Russian FMC market were tens of percent. For example, according to VimpelCom data, growth of revenue from service provision was over 50%. The company expects growth of service’s users at the level of 30% in 2015 vs 2014. The number of Express-Dial Service’s (Megafon) users increased for 25% during January – December 2014 and the amount of numbers, connected to the service – for 45%. The number of apps used FMC technology among corporate MTS’ clients increased for 30% during 2014 vs 2013. According to J’son & Partners Consulting’s estimations. the number of FMC users in B2B segment was increasing with CAGR indicator at the level of 22% during 2010 – 2014. At the end of 2014, FMC subscriber base reached around 200 thousand combined numbers of mobile and fixed communications. By the end of 2018, the number of corporate FMC users will be over 300 thousand. According to J’son & Partners Consulting’s estimations, share of FMC users in subscriber base of mobile users increased from 0.7% till 0.95% during 2010 – 2014, in fixed communication segment - from 1.1% till 2.4%. Analysis of Main FMC Market Players’ Offers in Russia FMC projects operate in Russia over 10 years. At the moment, we can identify 3 main groups of players. - BIG 3 Cellular operators (MTS, Megafon, Vympelcom); - Fixed communication operators, which cooperate with cellular communication operators under MVNO models or via the use of agent’s schemes (Gars Telecom, KantriKom, Rostelecom’s Subsidiaries etc); - Cloud services providers (NextTell, Sipuni, Oktell etc.). BIG 3 Cellular Operators Cellular operators offer FMC services to corporate clients. Key targeted group – clients with developed office networks, large companies with remote offices in different territories. Key peculiarities of services provision: - Combination of mobile and fixed number in unified corporate network; - Short numbering; - Reduced billing. MTS and Megafon distinguish functions of virtual PBX as separate services. Geography of FMC services by BIG 3 Operators: Service “Unified Network - Office and Mobile” by VimpelCom is provided in 2 options: o Combination of fixed and mobile numbers in unified network Beeline – 148 Russian cities. o Creation of unified corporate network for mobile numbers and office clients’ phones – all over Russian territory. The Geography of FMC services by MTS depends on the package: o The service Unified Corporate Network appears all around the country. It is possible to make calls in home regions, between region and also in the roaming, where MTS network is working in Russia. o The service Unified Network - 20 Russian cities. With the service Express Dial by Megafon, calls on short numbers of colleagues and its acceptance is available all over the country. Some Projects by Big 3 Operators - December 2014: VimpelCom signed the contract on provision of communication services (FMC, fixed and IP telephony) with MES Russia in Irkutsk region. Contract’s value (40 voice channels in SIP-trunk, 200 corporate numbers) was 900 thousand RUB incl. VAT. - December 2014: Federal Drug Control Service in Republic of Bashkortostan signed contract with MTS on the use of Unified Short Number service for 96 thousand RUB. in 2015 2014: Megafon provided FMC service (Express Dial) to the Ural Bank for Reconstruction and Development. Cell employees’ numbers by Megafon were combined with corporate telephone banking network. Short numbering on cell phones is used by bank’s employees for communication (internal employee’s number without additional symbols), reduced billing was also used. Fixed Communication Operators Fixed communication operators, which offer FMC services are Rostelecom’s subsidiaries (Globus Telecom, Eniseitelecom, Baikalwestcom), Gars Telecom, Central Telegraph etc. As a rule, operators sign agreements with mobile operators for provision of joined services to end customers. Different combinations of Light-MVNO model can be used for provision of cellular communication, including agent scheme. Key peculiarity of such projects is the fact that fixed operators, as a rule, do not earn on mobile part of FMC project. In most cases, they provide services of mobile communication by minimal prices from mobile communication operators without retail margin. Main factor, in this case, is operator’s desire to increase clients’ loyalty due to provision of additional services and easiness of receiving services from “one window” and also appealing tariffs on cellular communication. In most cases, fixed communication operators provide the following functions in terms of FMC service: - Integration of mobile numbers in corporate phone network - Calls: from mobile phones via short number with prefix (1 symbol + short number - 3-4) - Different ways to process incoming calls (redirection rules) - Unified city (federal) number (on demand, additional payment) - Services’ Details. Additional functions, offered not in every package: - Integration with soft phone - IVR - Unified support service. Some providers of fixed communication offer FMC service together with IP telephony (for example, Eniseitelecom). Cloud Services Providers Relatively new market trend in FMC – development of convergence services, related to virtual PBX. Key market players fixed demand on virtual PBX among clients, which are in the medium and large business, which is a big market driver for this segment’s development. In case of virtual PBX, mobile numbers can be connected without additional contract between operators, and to be distributed via agent scheme. AltegroCloud solution by NextTell can be called as an example of this business model implementation, also solutions by virtual providers - АТС Sipuni, IP-АТС by Oktell etc. For example, Sipuni company provides the service “IP phones on SIM card”, which allows employees to communicate by corporate phone via GSM connection under SIP operator’s tariffs even outside the office. Internet connection is needed for such communication. GSM network and IP Telephony integration was implemented on the base of FMS solution for virtual PBX. Since the end of 2014, AltegroFon operator (LLC NextTell), which is part of Altegro group of companies, announced about start of online sales of solutions for small and medium business – mobile virtual office AltergoCloud, key peculiarity of which – is integration with corporate mobile communication. Mobile phones of the company are being directly connected to virtual PBX, all calls from cells are being processed by flexible scenarios, appear in statistic and can be recorded. SIM cards operate in GSM network all over the country. In general, it is possible to identify wider range of basic PBX services in the cloud vs operators offers. The expansion of redirection services – is the integration with mobile communication for such providers. Conclusion Despite over the 10 years development, in Russia FMC market is still not that expansive – less than 1% of the total number of corporate mobile communication users. Nevertheless, there are good chances for more intensive development of FMC market in Russia in the coming future – growth rates will be higher than growth rates of mobile and fixed communication in corporate segment. The following tendencies had been observed on the market lately – consolidation of mobile and fixed communication operators, operators are seeking ways to increase ARPU and profitability (due to convergence services) and benefits from FMC are obvious for corporate users. Federal operators of cellular communication have the leading roles on FMC market (BIG 3 operators first of all), which consolidated assets of fixed communication and got high-yield clients base of corporate users, they have license for local communication and are actively constructing networks’ infrastructure. Although, according to the opinion of one of industry’s representative (fixed communication operators), even by having experience and infrastructure for provision of full telephony complex of services, including cable, mobile communication operators’ strategies, first of all, aimed at development of wireless services. On the other hand, sketches of the trend can be observed on the market – more active use of hybrid solutions (integration of cloud telephony and mobile communication).