Telecom 2008 Predictions

On day 1 of 2008, I tried to ruminate on the current trends in Telecom industry and technology and look forward to what 2008 might bring us. So check out predictions for 2008. Please do send your feedbacks.

A New Wholesale Carrier will be born

The 700MHz spectrum auction in the US (schedules to begin in January) presents a large opportunity for the emergence of a new wholesale carrier 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.

Move towards Open

In 2008 the open networks initiative will become a reality, but at the end of the day, the major network operators continue to dominate but the idea of forcing people into walled gardens is going to break down next year. The notion that the carriers can control everything is falling apart. AT&T, Verizon and Sprint Nextel will open up considerably. The telecom industry thinking about itself in exciting new ways, and it certainly will lead to some new experiences for consumers. But the telecom industry is a business dominated by giant companies and international bodies that set rules and technology standards. In other words, big change for the mass market is coming, but not in '08

Open Source Mobile Applications - As the development of applications for Google's highly anticipated Android platform becomes a topic of discussion, several open platform devices will rise to the surface, fostering new innovations in mobile application development, however we will not see any devices until the end of 2008. Most large carriers and applications developers will take a "wait and see" attitude. Introducing yet another mobile operating system into an already fragmented market will take years, and the thorough testing of a platform with 30+ parties will be a significant hurdle.

Industry Consolidation

There could be a number of telco buyouts next year. Despite having a new CEO Sprint Nextel given its challenges, is a likely takeover target. Sprint has been losing boatloads of cellular customers to AT&T Inc. and Verizon Wireless and some of the company's shareholders are complaining that WiMax is an expensive diversion. However, many experts believe WiMax is the only way for the company to thrive in the future. The success of WiMax is inextricably tied to the long-term success of Sprint

Expect to see more foreign investment in U.S. carriers. And it's a two-way street: We will see AT&T go out and pick up stakes in international carriers but most investment will be coming into the U.S. With the dollar so bad, everything in the U.S including shares of cellular carriers, is cheap. Everything in America is for sale.

There will be consolidation in the French market, which will lead to fiercer quadruple-play competition. Not only will Neuf Cegetel and SFR merge to create an integrated fixed and mobile competitor to Orange, but also Bouygues Telecom will team up with either Iliad or Numericable. Meanwhile, "Telecom Italia has sorted out its corporate nightmare and could be on the prowl for some foreign acquisitions next year.

In Emerging markets everyone's looking at China buying overseas, but 2008 could be the year when we finally see some meaningful foreign buying in the Chinese telecoms sector as the government seeks to curb China Mobile's growing dominance. Telefonica is known to be keen to increase its stake in China Netcom. One of the big Middle Eastern players could make a move. The Vietnamese market is going to open up to foreign players and SingTel will make a huge investment. In the MEA region Zain continues to grow at a fast pace and make more acquisitions, possibly in Europe. Meanwhile, "Vodafone will look to boost its presence in Africa by taking control of South Africa's Vodacom."

Mobile handset

The biggest story in this area will be the release, at the end of 2008, of the first phones based on Google's Android platform. They won't initially be a big hit and won't be as advanced as people expect, Google has a lot of lessons to learn about mobility. I expect to personally see first Android phone in Mobile World Congress (3 GSM) 2008 (Mostly by HTC !).

Handset manufacturers will endeavor to replicate the iPhone. The handset makers will all finally cotton on to improving phone interfaces, and thus improve the take-up of mobile broadband. Apple has raised the bar and competitors are improving their devices.

Mobile handset makers will try to push their environmental credentials. Indeed everyone – network operators, vendors and service providers – will make a lot of effort publicizing how green they are.

One further area of high interest is the impact Nokia's OVI initiative will have on the market. With Vodafone, and Telefonica, and TIM signed up to certain degrees, the question is, will other operators see the benefit of such a closely integrated structure with the dominant handset player in the market. The other question is, will other handset vendors follow tune.

The initial deployments of WiMax handsets will be something worth watching, but so will the costs of these devices. With the first generation of WiMax mobile phones set to hit the U.S. in 2008, some analysts are predicting that certain models could cost as much as $1,500. That's not cheap, but if the technology truly works, demand could hit its stride late in '08.

Technologies

GPON to WDM PON - Carriers are already starting to look beyond GPON to WDM PON. Neither will be deployed in a large scale next year, but the pursuit of both will have a significant impact on the kinds of services that start to capture attention.

Backbone - More operators will announce the deployment of 40 Gbps in their core backbones.
Docsis 3.0 - 2008 just may be the year we finally see cable's answer to fiber-to-the-home, Docsis 3.0, show up in real live networks. And not a moment too soon, either. Investors are starting to fear that the telcos can't be caught by cable in the bandwidth race. Comcast Corp the largest cable operator in the U.S., has seen its stock fall more than 35 percent this year alone.
Bendable fiber - Fiber-to-the-home as a technology made major strides in 2007, but getting fiber directly to the millions of people who live in apartment buildings, other multiple dwelling units (MDUs), has proved to be a big headache due to the cable's signal loss that results when being bent. New Clear Curve technology could help carriers achieve major MDU gains in 2008. The new fiber can be bent around corners with virtually no signal loss, making it much easy to deliver FTTH services in places that aren't usually fiber-friendly.

Provider Backbone Transport (PBT) - In 2008, it could end up being one of the most widely deployed. Some vendors claim that every Ethernet RFP they're seeing from the carriers has some form of PBT in it. That doesn't guarantee PBT will get deployed or will be the star of the show, but it indicates how keen carriers are on keeping Ethernet connections low cost and easy to manage.

Packet optical - The market for packet optical switches arrived in 2007, but it won't have a financial impact on vendors and carrier networks until 2008. These transport devices, packed with Sonet/SDH, wavelength switching, and connection-oriented Ethernet, are getting interest from Verizon communications Inc. and other carriers, as they look to cram more types of traffic on Sonet networks and deliver packet-based services, too. Big packet optical developments are expected in 2008.

Wimax - It's the do or die year for WiMax, though Sprint won't recoup their investment in 2008, but we'll start to see if the technology works and if their business plan will work. Sprint is about to soft-launch its Xohm WiMax service in the Chicago and Baltimore-Washington markets and said it will make the service available in many more markets as 2008 unfolds. The company said Xohm will be faster and cheaper than 3G.

Femtocells - Femtocells are a cost-efficient method for providing improved mobile phone coverage at home, small businesses and enterprises. In 2008 we will see the first roll-outs of femtocells by large wireless and wireless/converged operators. We expect a variety of business models, such as enterprises receiving subsidised femtocells with new service contracts and direct sales of femtocells to consumers. Along with the challenge of creating small form factor base stations, there remain technical obstacles of operational and billing support systems, and the network management of femtocells

WiFi Ubiquity - 2008 will witness the break-out of WiFi. It will no longer be restricted to PC usage. We will see wide-spread WiFi integration with consumer electronics, such as digital picture frames, automotive infotainment (download of music, podcasts, latest navigation maps and traffic information), cameras and music players.

IP comes to mobile backhaul- As data traffic continues to increase, and operators increasingly promote data tariffs, 2008 will see mobile operators beginning to optimise their networks for data. Carrier-class Ethernet will become more prominent in backhaul networks - particularly with microwave backhaul. The coming twelve months will see the mass launch of IP-enabled base stations following their trial throughout 2007. 2008 will see operators use these base stations to add capacity and scale up their networks - notably using the features of IP to route information between nodes to make best use of the available backhaul links.

RF Technology Convergence Will Finally Start to Materialize
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.

IMS - IP Multimedia Subsystem (IMS) will enable futuristic applications, such as still photos to the set-top box, video home surveillance for mobile phones and location-based technologies that combine a fixed and mobile presence. The biggest challenge for IMS is integration and interoperability with existing networks. In 2008 we will see the introduction of Voice Call Continuity architectures, developed to support existing handsets and new VCC-client based handsets. This is the year when IMS generates revenues from wide scale commercial services.

Mobile TV - In Europe we are expecting to see a shake out in mobile broadcast TV, as rising revenues in Italy convince many that the wholesale DVB-H model is the way to go ahead. France probably offers the most interesting market, and will also offer Alcatel-Lucent the most likely outlet for its DVB-SH version of the standard. OMA BCAST will continue its development, with smartcard profile really beginning to develop interoperability across the market
In Emerging market the prognosis is not much better for mobile TV offers. SK Telecom S-DMB will go bankrupt in South Korea, or they will introduce charges for it to mobile customers. And elsewhere, mobile operators could start to announce MBMS and/or TDtv plans as they become increasingly frustrated with the lack of spectrum for DVB-H.

And at last among the people driving these technologies, Pat Russo will be asked to go and there will be some major changes at Alcatel-Lucent and Nokia-Siemens Networks. There could be another merger, or someone will bail out. Motorola will continue to have problems and is unlikely to reverse its fortunes in the next 12 months.

The advent of WiMAX, femtocells, fixed mobile convergence, open source mobile devices, all indicate that life for mobile network operators, equipment manufacturers and device manufacturers will continue to get more complicated. However, in 2008 consumers will seek the brands that make this complex experience simple.

New Services

Location, location, location –
This will be carriers’ slogan for how to make money in 2008. Location- based services can open powerful new business models for carriers and compelling new applications for consumers. The personal navigation will become reality in 2008. It is about searching and sharing information that is directly relevant to the individual based on the context of where, when and even who they are. This moves beyond maps as a static route planner, instead moving the concept of navigation towards real-time personal content.

Internet
At a broad strategic level, it appears likely that 2008 will see a real increase in the usage of internet services over mobile. 2007 say operators begin to offer "half open" internet services, with tight integrations done between the major players, the Yahoo!s and Windows Live properties, or YouTube and the major social networking sites. In 2008 we can expect that model to continue, but also to see the walls come down even further, aided by the increasing number of handsets with presence and location capabilities, with search embedded.
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Advertising -
It also seems likely that advertising is going to be a hot area - not least amongst those bidding to convince operators they are there for the operators' benefit, and not for the benefit of the ad service company. This now traditional split in the content/mobile industry will be fierce in advertising.

Banking -
Another service we'll tip for 2008 is banking. As we've seen this year, mobile banking is starting to be the area consumers are trusting - and the mobile lends itself very well to the model. The key here will be access to services from a full range of handsets, not just those loaded with a particular app, or those with certain operators who have certain partnerships with a particular bank. NFC of course will continue its push in payments and interestingly, may start to open itself up as an avenue for other applications. Value added services such as mobile coupons, identification/ authentication and peer-to-peer connections can also be implemented in this way.

Regulatory and policy

In Europe Viviane Reding will hold a big telco summit in Belgium and invite all of Europe's big operators and national regulators to attend in order to air their concerns, but in actual fact it will be a Godfather-style purge, leaving her as supreme telecoms overlord.

Lobbyists and Policymakers in the US will continue to try to apply legacy rules and regulations on Internet based applications, be it voice, television or radio. The FCC will attempt to extend its definition of indecency laws to the Internet, Cable and Satellite networks prior to the 2008 Election.