inCode, a VeriSign Company, Announces Top
10 Wireless Predictions for 2008
Key trends expected to drive the wireless world in 2008 include Google’s
foray into the market, the rise of mobile advertising and the battle
between WiMAX and LTE
Mountain View, Calif., Dec. 19, 2007 – inCode, a VeriSign Company,
today announced its Top 10 predictions for the game-changing events
that will shape the wireless industry in 2008. The predictions cover
major trends ranging from who will win the communication standard wars,
what role Google will play in the wireless world after January’s spectrum
auction and whether or not consumers will finally open up to digital
content and mobile advertising.
The predictions, first created in 2003 by inCode,
a global business and technology consultancy acquired by VeriSign in
November 2006, are designed to help wireless industry players, partners
and consumers better plan for the coming year.
“The coming year is going to be incredibly important
for the wireless industry as new business models begin to take shape,”
said Jorge Fuenzalida, vice president of communications consulting for
inCode, a VeriSign company. “Beginning with the spectrum auction
in January, to the continuing battle between fourth-generation (4G)
technologies LTE and WiMAX, to what it’s going to take to make converged
wireless a reality, wireless will look significantly different in several
critical ways one year from today.”
2008 predictions highlights (full text follows this
release):
- The WiMAX/LTE
wars will end with a whimper. The long-awaited "take-off-the-gloves"
battle between next-generation wireless technologies LTE, HSPA and WiMAX
will not occur since they are in different stages of maturity, with
HSPA already enjoying widespread adoption and a flourishing device market.
- A new wholesale
carrier will emerge. The 700MHz spectrum auction presents a large
opportunity for the emergence of a new wholesale carrier (i.e., no retail
operations or direct customer) that focuses on being the most cost-effective
player in the market and avoids the retail game. The wholesale carrier
model will be driven by companies such as Google – but the question
remains: How much control will Google be able to garner?
- Peer-to-peer
(P2P) technology goes mainstream. Long used for pirating files,
US distributors follow the UK's lead and begin to utilize next-generation,
secure and DRM-protected P2P for mobile content distribution.
- For the eighth
year in a row, mobile service quality will continue to deteriorate.
The combination of new technology (3G), multi-band, multi-access technology,
advanced and complex handsets, least-cost routing and under-investments
in network coverage have made mobile services less reliable than they
were before the introduction of 3G.
inCode 2008 Top 10 Predictions for the
Global Wireless Market
1. RF Technology Convergence Will Finally Start to Materialize
Prediction: The likelihood for global harmony is greater than
ever; HSPA will continue to grow rapidly and the elements around LTE
will be OFDM-based. The long-awaited "take-off-the-gloves"
battle between LTE, HSPA, and WiMAX will not occur since the three technologies
are in very different stages of maturity, HSPA is a mature technology
with more than 10 million users around the world today and with a flourishing
device market. WiMAX is still a technology in a very early stage with
trial networks around the world and most likely with one to two more
years before commercial volumes are reached. LTE is even further away,
and with normal technology maturity timelines it will not be a commercial
technology until 2012. With increasing development cost and vendor consolidation
it is likely that it is in all parties’ interest to allow LTE be the
first time ever we experience full global harmonization RF technology.
2. A New Wholesale Carrier Will be Born
Prediction:
The 700MHz spectrum auction in the US presents a large opportunity for
the emergence of a new wholesale carrier (i.e., no retail operations
or direct customer) that focuses on being the most cost-effective player
while avoiding the retail game. The wholesale carrier model will be driven
by companies such as Google and will operate at a lower cost per minute,
leverage technologies such as software-defined radios to support multiple
standards and utilize offload techniques such as WiFi/femtocells that
reduce spectrum requirements. This will also gain traction from MVNOs
that want to move away from relationships with traditional carriers.
Carriers have always had both retail and wholesale sides, and that duality
has never allowed the MVNOs sufficient margin on which to thrive. The
debate will consist of how much control Google and other potential bidders will
want in the end.
3. Device Proliferation: Open Access as an Emerging Business
Model
Prediction: Open access and strong competition in the chipset
industry will push device and handset vendors to bypass carriers and
build closer ties with the end user. Given the diversity and increased
data usage of devices, we will see a great effect on open access rules
and how subsidies are determined – including the use of advertising
options, certification and even security models. For instance, the move
from traditional cellular, where there is a somewhat closed system with
high security, creates a need for security on the fly with devices that
just "appear." All told, the open access model is an opportunity
to provide more differentiated services, but the downside is the elimination
of subsidies by carriers for devices. This will be supplanted by advertising
support subsidies, and customers will therefore have to trade carrier
contracts in exchange for dealing with advertising in order to receive
low-cost or free phones.
4. Quality of Service Differentiation – The Road Begins This
Year
Prediction:
Service stacking and quality will become very important, especially
after the 700MHz auction and consolidation chapters close. When the
number of players decrease, options on offerings increase – and carriers
will change focus from expanding the network to optimizing the customer
experience. The shift to IP networks and open access will create greater
motivation and opportunity to look at real quality of service distinctions
for carriers selling to customers. On the low end, end users can use
a pure open access network, where one brings his or her own device without
subsidies and receives services that are offered on a best-efforts basis. On
the high end, users can get very high reliability, priority access,
and QoS guarantees that provide consistent experiences on VoIP and other
applications. There are also multiple levels in-between. Customers will
self-select service based on the performance they want and the price
they are willing to pay. Carriers will also be able to match costs of
service much closer to the prices paid, rather than the situation today
in which all minutes generated by all customers are essentially equal.
There may be differences at the customer care or sales support level,
but not in the actual provision of services or overall policies. In summary,
when the real estate is bought up and you can't build out, you build
up.
5. Wireless Broadband is More About Speed Than Mobility
Prediction:
We will finally have an answer for why European operators invested so
heavily in 3G seven years ago, given a positive outlook for consolidated
carrier markets for the next 3-5 years. Wireless broadband will continue
to be the fastest-growing service since prepaid and SMS. Customers love
it, but since it is priced and sold as a DSL service, there is very
little focus on the strength of the cellular technology (i.e., mobility).
Significant implications will revolve around the usage model, transport
network and, equally important, revenues. Operator differentiation is
more about a personalized service that best leverages a simplified user
experience and customer support. 2008 will be a breakthrough year for
broadband – HSPA will be the dominant technology in this space until
LTE is commercially viable, and it will be increasingly embedded in
laptops while WiMAX will be embedded in certain consumer devices. This
trend will also boost the laptop market as it they will be better connected
than ever before.
6. P2P – From Theft Model to Business Model
Prediction: P2P becomes mainstream as a technology. Long used
for pirating files, US distributors follow the UK's lead (e.g., BBC,
Channel 4, Sky) and begin to utilize next-generation, secure and DRM-protected
P2P for content distribution. Media delivered via IP/Internet/broadband
will completely blow apart the "walled garden" relationships
created over the years. In addition, there will be major impact
on services such as Slingbox/Echostar. Major studios and broadcasters
will increase the rollout of over-the-top services (a la NBC Direct,
Hulu), following fast on the heels of what BBC and others have already
done. As "over-the-top" media takes hold for legitimate services,
and the best of download services are using P2P, ISPs move from blocking
and tackling (traffic shaping, etc.) to building strategic relationships
with providers and media distributors. Again, the consumer wins!
7. In-building and Femtocells – Show Me The ROI
Prediction:
In-building will play a large part in carriers' strategy to fill in
coverage gaps, driving increased ROI for enterprises and average revenue
per user (ARPU) for carriers. Carriers will follow an "inside out"
strategy, enabling coverage that focus on where the most lucrative customers
are (e.g., enterprise, in-building) instead of blindly blanketing a
city with coverage. Carriers will be looking at low-cost, low-power
femtocells as a way of increasing coverage and capacity, fostering customer
loyalty, investigating offloading strategies, and reducing operating
costs. However, unresolved technical and business issues such
as wireless interference problems, what devices caused them, what channels
are impacted, lack of a good managed service/business model, closed
access, and competition from WiFi will make 2008 the year of heavy buzz
with little actualization.
8. Backhaul Makes a Haul – A Move From Wireline to Wireless
Prediction:
As the carriers roll out 3G infrastructure and continue to introduce
bandwidth-intensive data service offerings, the backhaul portion of
their networks must be optimized and/or upgraded to ensure that the
service quality is not compromised. Most backhaul is comprised of leased
TDM facilities provided by the fixed line carrier. As a result, backhaul
will represent a significant operational expense, in many cases totaling
as much as 30 percent of a carrier’s annual network operating expense
budget. Carriers cannot continue to scale their backhaul using leased
TDM facilities when data traffic is growing exponentially and will begin
to explore other options for backhaul including fixed wireless, HFC,
Carrier Ethernet, DSL, and fiber. In addition, the high cost of real
estate to mount antennas and high costs per megabit will impact microwave
deployments in North America. One trend that will help reduce microwave
cost significantly is a move away from point-to-point architectures
toward point-to-multipoint designs.
9. Mobile Advertising Gains Steam – Will it Stick or Get Stuck?
Prediction: Mobile advertising will become a significant event,
sponsoring content and driving innovation – so much so that carriers
will no longer look at their business cases on a strictly subscription
basis. In fact, subscription-based models will lose again to advertising-based
models, replicating what happened on the Internet. It is not just the
carriers who are building advertising steam. Google, for example, is
a $200 billion market value “advertising” company, and the carriers
are sitting on precious assets – the wireless networks – that should
be leveraged and monetized. By addressing services such as intelligent
search, location-based search, and other tie-ins with a variety of content
and product partnerships, carriers who understand this fact will begin
generating sizeable advertising revenues in 2008. Why do you think Google
launched Android?
10. Mobile Device Security – The Internet Brings its Security
Baggage On the Road
Prediction:
Not only does the popularity and number of iPhones continue to increase
(and make way into enterprise organizations), the significance and sensitivity
of data on these devices also continues to rise. A major iPhone security
incident will raise the awareness of and need for mobile device security.
This will therefore create and drive a new market for mobile device
security software as well as mobile device management software and services.
Finally, as a bonus prediction, the wireless industry
has a tremendous opportunity go back to basics in response to consumer
demand for more reliable phone service:
Back to Basics, Please!
Prediction:
Mobile service quality will continue to deteriorate for the eighth year
in a row. The combination of new technology (3G), multi-band, multi-radio
access technology, advanced and complex handsets, least-cost routing
and outdated roaming solutions have made mobile services less reliable
than they were before the introduction of 3G. This means more dropped
calls, poorer quality calls, and more failed call set-ups for the user.
There will be a growing market for more robust phones with a single
band, fewer features and longer battery life for people that are really
dependent on a reliable phone service.
About inCode
inCode (http://www.verisign.com/global-consulting/telecommunications-consulting/index.html),
a VeriSign company, is a global wireless business and technology consulting
firm. inCode develops and implements high-impact strategies and solutions
to help increase the profitability and performance of wireless networks.
inCode also helps guide enterprises in harnessing the power of wireless
communications for productivity and competitive advantage. inCode understands
where the wireless world is going and how to get there first. On Nov.
30, 2006, VeriSign, Inc. (NASDAQ: VRSN) acquired inCode. VeriSign operates
intelligent infrastructure services that enable and protect billions
of interactions every day across the world’s voice and data networks.
Additional news and information about the company is available at www.verisign.com.
Contacts
VeriSign Media Relations: Lisa Malloy, lmalloy@verisign.com,
202-270-7600
VeriSign Investor Relations: Nancy Fazioli, ir@verisign.com,
650-426-5146
VeriSign Industry Analyst Relations: Katie Hammler, khammler@verisign.com,
703-948-4367
Statements in this
announcement other than historical data and information constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These statements
involve risks and uncertainties that could cause VeriSign's actual results
to differ materially from those stated or implied by such forward-looking
statements. The potential risks and uncertainties include, among others,
the uncertainty of future revenue and profitability; potential fluctuations
in quarterly operating results; the effect of VeriSign’s new strategic
focus and business divestitures; and increased competition and pricing
pressures. More information about potential factors that could affect
the company's business and financial results is included in VeriSign's
filings with the Securities and Exchange Commission, including in the
company's Annual Report on Form 10-K for the year ended December 31,
2006 and quarterly reports on Form 10-Q. VeriSign undertakes no obligation
to update any of the forward-looking statements after the date of this
press release.
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