If you’re wondering what 2010 has in store for the wireless industry, look no further than advisory firm inCode Telecom, which recently released its annual list of Top 10 telecom predictions – plus one bonus item. The predictions address everything from the net neutrality debate at the FCC (no, a fast remedy is not expected) to trends in data pricing and the operating system “wars” that likely will lead to one device OS biting the dust. Almost all of the predictions are directly related to wireless.
1. Wireless operators push netbooks, but they prove a mixed bag. Rob Chimsky, inCode vice president and chief technology officer, says there are a couple things in 2010 that seem like a blessing and a curse, and netbooks are one of them. Netbooks represent a lot of opportunities to sell incremental data plans in North America, but the challenge arises in that they put more strain on already strained data networks. Netbooks also mean wireless carriers will be taking more responsibility under their umbrella, and consumers will demand better synchronization between their devices, such as consistent addresses between smartphones and networks. inCode says operators will either have to spend significantly to develop new capabilities or outsource them to prevent consumer backlash.
2. The FCC: Stuck in neutral with the Net. Here’s a biggie. Of course, the debates on net neutrality will continue for some time. As Chimsky says, “it’s not doing to be simple.” All sides are going to be giving input and FCC efforts to reach a compromise will bog down for months. In the end, it will be a compromise that likely makes nobody completely happy, he says. inCode expects the commission will allow limits on certain traffic that may be detrimental to overall network usage, providing limits that are not overtly directed at certain types of service or specific service providers. Meanwhile, operators will need to find ways to gain traction in an environment encouraging more over-the-top services, inCode predicts.
3. Wireless operators play “whack-a-mole” with data issues. Until now, bottlenecks typically have been related to RF. As operators move to LTE and continue with HSPA, networks will get even closer to a wireline equivalent. But other issues will creep to the forefront, such as backhaul and battery life. Battery life has not kept up with RF technology advances, and the severity of the gap will increase amid high-speed connections and always-on connections. Plus, as people increasingly use wireless to replace wired, they will expect better in-building coverage. Much time, effort and capital spending will be directed at finding solutions for these types of capacity issues.
4. When all devices are smart, what becomes genius? The smartphone as a category to create distinction is no longer going to work, Chimsky says. There will come a time when anything above entry level is smart, so the industry must look at other ways to categorize devices. Most likely, phone features will revolve around things like social networking or entertainment-centric, moving to a combination of features that create a use or function case.
5. Wireless data pricing looks more like the airlines’ model. Once somebody starts to offer unlimited data plans, it’s hard to move back, but carriers will be pushed to create additional sources of revenue. So they may start to look more like the airlines in that they charge for everything else on top of the basic transport service. “We think this will also drive quality-of-service-based pricing,” he says. Forces want to prevent carriers from giving one content provider a better level of access over another content provider, but applications such as VoIP or video streaming could be priced higher than just best-effort connectivity.
6. M2M leads operators into new acquisition area. During the course of 2009, M2M has become a hot topic among operators, with AT&T forging a partnership with Jasper and Verizon Wireless and Qualcomm forming a joint venture called nPhase. Operators that previously were reticent about M2M now recognize the profit-boosting characteristics of the business, such as low churn, low cost per gross add and an increase in non-peak traffic. But this also takes operators into the space of managing enterprise solutions, where carriers don’t have a great core competency. inCode expects at least one operator will make a significant acquisition of a major M2M player to jumpstart its capabilities in the market.
7. A look at clouds from both sides now. Operators embrace cloud computing because it places more value on the core network and increases customer “stickiness.” But operators need to be on the lookout for gray skies, inCode warns. End device makers don’t want to be thought of as producing dumb terminals, and operators don’t want to be the dumb pipes. There will be clashes, but inCode doesn’t expect any great clarity on winners coming in 2010.
8. A device OS bites the dust. inCode isn’t saying which one, but Chimsky acknowledges that it’s a volume game. Right now, we’ve got BlackBerry, OS X, Windows Mobile, Web OS, Android, Symbian and Linux Mobile in the game. Significant strength is coming from Android, but the likes of Palm and Linux already are showing signs of struggle. The OS platforms with extensive developer support, streamlined certification processes and integration of Web 2.0 features establish early leads, the firm says.
9. MVNOs get new lease on life in a very different form. No doubt about it, MVNOs have struggled in North America, and the few that found success eventually were acquired by network operators. A lot of factors affected winners and losers, but it’s always hard to create a business model where the MVNO is reliant on what’s essentially a competitor for its basic technology. The MVNO 2.0 model will be built around a new model emphasizing delivery of total solutions with wireless as part of the package. An example is the free Amazon Whispernet content service accessed with a Kindle. The risks are lower for mobile network operators because they are not enhancing a direct competitive brand and they can penetrate markets previously not so easy to access. Cable companies using Clearwire’s network also represent an MVNO model that has a good chance of being around as the cable brands promote the service, Chimsky says.
10. Game console video kills the PC star, at least for Internet video. Internet video primarily has been consumed directly on the PC as streaming bite-sized clips, and only early adopters viewed streamed or stored Internet video on their TV. The amount of video viewed on TV doubles in 2010, and the gaming console will serve as the primary gateway, accounting for almost half of usage, according to inCode.
Bonus Prediction: You can’t track the players without a scorecard. Traditional wireless operational measurements are losing relevance. What does ARPU mean in an environment where you have multiple sources of revenue from the same customer? What does churn mean when people are mixing and matching different devices and services? In 2010, “there’s going to have to be more thinking about a different set of metrics in terms of how we view success in the industry,” Chimsky says. A new set of customer-focused metrics will emerge and borrow criteria, such as share of wallet, from other industries.
Editor’s note: Check out the December issue of Wireless Week for more 2010 predictions from wireless industry leaders.
Filed Under: Industry regulations
