HSPA Takes on All Comers

Although 4G gets all the hype, HSPA quietly and methodically will come to dominate the market. HSPA and HSPA+ are poised to serve the data needs of wireless customers for a long time. The HSPA experience may be good enough to compete with WiMAX and will offer better geographic coverage than WiMAX for the next couple of years.

The faceoff for the technology best able to make inroads in the embedded consumer electronics space is between WiMAX, backed by Intel, and HSPA, offering coverage ubiquity and economies of scale. Finally, LTE will get to market in 2010 primarily due to a strong push from North American CDMA carriers looking to counter HSPA+.

Traffic Lights on the Information Superhighway

3G networks finally are providing an acceptable Internet experience. Network improvements have led to the proliferation of smart phones and the continued uptake of 3G air cards. However, operators increasingly are risking traffic bottlenecks driven by certain video and peer-to-peer applications. Increasing fine print for all-you-can-eat data plans will limit the worst bandwidth hogs.

Bandwidth caps and pricing schemes will look like tiered airline pricing with first class reserved for the highest ARPU customers and applications. Operators will start managing QoS. They also will promote Wi-Fi and femtocells to help offload 3G traffic and protect “first class” surfers. However, bandwidth limitations will raise issues about net neutrality that have produced major discussions in wireline broadband.

Network Outsourcing—Back in Vogue

Operators are increasingly trying to differentiate themselves by a “cool experience” rather than network coverage and quality. Capital and cost pressures mount, and one of the major network operators will outsource its most sacred cow—the network. Also, at least one of the Tier I or II carriers will outsource labor intensive functions, such as network planning, designing, buildout, and operations, to an OEM/services partnership.

The companies best positioned to take this business are IBM, which has large outsourcing contracts with major operators worldwide, and Ericsson, an investor in services and network outsourcing for the past eight years. Outsourcers need to gain scale quickly, perhaps by signing a Tier I operator as an anchor tenant and adding Tier II and Tier III operators, which face capital constraints.

The Land of the Converged Operators

The trend toward time-shifting and place-shifting for digital media will increase. An innovator will deploy a true “three-screen” service enabling consumers to discover, purchase, consume, and share digital content seamlessly on three screens with a “wow!” customer experience. The leader could be an Internet company (Google, Yahoo, Amazon), consumer electronics OEM (Apple, Sony, Panasonic, Microsoft), or media firm (Fox Interactive).

Open mobile networks will enable a business model combining advertising, ad-supported, subscription, and pay-per-use models. The successful player will have celebrated devices with strong industrial and user experience design, world-class Internet infrastructure and systems integration experience, and a digital content library with mass consumer appeal.

Facebook for Fun, Location for Money

In 2008, consumer awareness was raised for the benefits of personal location beacons. Zoombak commercials will appear regularly on cable and network television, highlighting family and personal safety as a core driver for purchasing these wearable services. Advances in cellular-based location services such as A-GPS and sophisticated U-TDOA will be deployed for wearable personal safety, a natural evolution for established safety-centric brands such as On Star, Life Alert, and others.

Telemetry-friendly cellular plans coupled with small, battery-efficient devices will elevate the position of wearable safety on many family budgets. Wearable LBS also will gain a foothold in the social networking market, where fun and connectivity are the primary drivers over safety and security.

Femtocells Continue to Climb the Hype Curve

In tough economic conditions, subscribers will reduce spending by discontinuing wireline service. Operators experiencing strong customer dissatisfaction over in-home coverage will be the first to order femtos in 2009. This will reduce pricing and set the stage for massive femto adoption in 2010. The proliferation of unlimited data plans will push operators toward offloading expensive wireless traffic to more economical wireline broadband.

Bonus Prediction: Green is the New Black

To lower costs and take better care of the environment, many companies will adopt green technologies and reusable energy sources. AT&T, Sprint, and Google have led the charge. This year, the move to green will occur on four fronts.

First, more mobile operators will leverage environmental awareness with marketing solutions such as video conferencing and digital/mobile transactions that keep people off the roads. Second, at least one enterprising operator will try to generate economic value by helping business customers reduce their carbon footprints. Third, to push best practices for environmentally friendly development and production down the value chain, operators and industry leaders will prod suppliers to adopt more scrupulous energy-reduction programs. And fourth, recycling programs and “green” mobile devices will gain favor.

Rob Prudhomme is the vice president of practice development at inCode (www.incodetel.com), where he is responsible for analyzing communications industry market trends and developing new service offerings and tools to help inCode’s clients develop effective strategic plans. He has an MS in telecommunications from the University of Colorado, Boulder, and graduated cum laude from Doane College, Nebraska, with a BA in communications.