She said innovation can be stimulated by smaller providers because incumbents will always want to be at the forefront of development.

"Telstra's hold on infrastructure will break if the smaller providers develop their own technologies [rather than] following its footprint, because as people consume the technologies they will put more pressure on the infrastructure," she said.

"There is an increasing need for more bandwidth as telcos churn out innovative services, [which] led France Telecom to test Fiber to the Home (FTTH) in mid 2006, and Iliad to announce the roll-out of a FTTH local loop."

Telsyte managing director Warren Chaisatien said Vodafone UK and British Telecom (BT) have trialed FMC as a part of multi-play bundles and found it is a long way from mass market use.

"They have found while FMC works, it is a long way of mass market appeal," Chaisatien said.