Annually, inCode, an independent advisor to some of the most influential telecommunications companies and leading enterprises, creates the “Top Ten Predictions for Telecom” by identifying emerging economic, technology and marketing trends affecting consumers and businesses. As 2009 begins, several trends are converging to reshape the telecommunications industry, many of them driven by the current economic crisis and its impact on household budgets.

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These economic pressures, inCode predicts, will be reflected in the consolidation of the network operator and infrastructure segments. These challenges also are expected to lead to at least one major carrier outsourcing its major network operations to one of the stronger network infrastructure or services firms.

The primary beneficiaries of this consolidation will be the carriers and infrastructure providers on the high end, such as AT&T and Verizon, and on the low end, like Metro PCS, Leap Wireless, and Chinese infrastructure vendors focusing on low-cost services and equipment. Metro PCS already has announced quarter-over-quarter growth of 74% and year-over-year growth of 52%.

Commensurate with the credit crisis across the entire financial sector, there will be significantly less private equity and venture capital investment in 2009. However, this retraction by traditional investors will open doors for Internet players such as Google, Yahoo, and Microsoft, who may seek to invest in or acquire struggling startups that enable them to extend their business models to mobile applications.

On the mobile device front, the rest of the device OEMs will launch their "iPhone killer" devices, a process that started about 18 months ago as Apple competitors kicked off development projects in response to the original iPhone (Fig. 1). These devices will feature full browsers, touchscreens, and full Qwerty keyboards along with rich applications that enhance the mobile browsing, messaging, and social networking experience.

While there has been much talk in the industry about LTE and WiMAX—the fourth generation of cellular technology—the Internet experience for the "iPhone killer" segment largely will be enabled by HSPA and HSPA+ over the next five years. HSPA already has been deployed by several carriers globally and includes technical improvements to the HSDPA standard, such as HSUPA.

HSPA will enable these iPhone-like devices to upload videos to YouTube in seconds so users can share their experiences in real time. The upload speeds that were at 384 kbits/s with HSDPA are now a maximum of 5.7 Mbits/s. The next step is HSPA+, which delivers up to 42 Mbits/s in the downlink and 11 Mbits/s in the uplink. HSPA+ will be available in early 2009.

As the global iPhone network operators have already seen, this dramatically improved mobile Internet experience can cause traffic jams on the network. Operators will address this issue through a combination of revised rate plans, including new conditions for "unlimited" plans, as well as policy management infrastructure in the network that controls the amount of bandwidth allocated to individual users. This already has been seen on fixed broadband networks and could be deployed by one or more mobile operators in 2009 as well.

Operators also will manage these traffic jams by offloading traffic from the macro network to femtocells, which are small, in-home cellular basestations the size of Wi-Fi access points (Fig. 2). While femtocells received a lot of press in 2008 and will continue to do so in 2009, their breakout year won’t come until at least 2010 or beyond.

That’s because it will take most of 2009 for vendors to bring out standards-compliant products. (The standard for GSM/HSPA femtocells was just recently approved.) Vendors also have to resolve some of the difficult remaining technical issues, such as interference with the macro cellular basestations. And, they have to sell enough units to begin to realize scale efficiencies. With this long to-do list, it will be a while before the hype stops and the reality begins for femtocells.

In the world of applications, the big news in 2008 was open mobile networks, as several operators announced plans to reduce some of their traditional controls to allow third-party devices and applications to exist and be accessed on their networks. In 2009, mobile social networking and location will grow.