inCode Predicts Telecoms Top Trends in 2010

Heavy data usage by netbook users could place more strain on already loaded data networks. Operators will either need to spend significantly to develop these capabilities or outsource them to prevent consumer backlash.

The significant debate on net neutrality rules continues, and FCC efforts to reach a compromise bog down for many months. The potential imposition of net neutrality in wireless already has had a chilling effect on spectrum auctions and rural broadband stimulus participation. Ultimately, the FCC will reach a compromise between network reliability and innovation that is satisfying to no one. Operators will need to find ways to gain traction in an environment encouraging more over-the-top services.

Verizon has begun its aggressive deployment of LTE, and AT&T is continuing with HSPA. Other operators are following suit. Operators focus on new backhaul solutions that can cost effectively handle increased traffic. Additionally, device battery life rears its head further because high-speed data applications and always-on connections drain battery life quickly. Operator coverage – especially in buildings – is strained as customers use wireless as a replacement for wireline capabilities.

Mobile phones above entry level pricing tiers morph into computing platforms so smartphones as a distinction between tiers ceases to exist by the end of 2010. New levels of distinction emerge with high-end units becoming powerful Internet devices with voice calling as a secondary function.

Much like airlines that couldn’t increase basic rates, wireless operators increasingly turn to charging for incremental features and capabilities beyond basic transport. This is most evident in wireless data services and leads to quality of service pricing. Applications such as VoIP or video streaming that require more guaranteed service are priced higher than just best-effort connectivity.

Operators previously reticent to dive into M2M now recognize the profit-boosting characteristics of this business: low churn, low cost per gross add, and an increase in non-peak traffic. However, many operators possess limited competencies in the support and management requirements associated with M2M enterprise solutions. At least one operator makes a significant acquisition of a major M2M player to jumpstart its capabilities in this market.

Challenges of response time and coverage can affect utility of usage. Plus, network security and vulnerability issues make customers hesitate. Other cloud companies, such as Amazon and Google, provide these services across wireless and fixed in an “over the top” way, relegating operators to “transport pipe” status. During 2010, expect storm fronts to collide [with little] clarity on winners.

A recession is still on, and there isn’t enough device revenue to support seven different operating systems: BlackBerry, OS X, Windows Mobile, Web OS, Android, Symbian, and Linux Mobile. While “open” attracts much support for Google and Android, expect that one OS drops. Those OS platforms with extensive developer support, streamlined certification processes, and integration of Web 2.0 features establish early leads. Consolidation rather than continued fragmentation is the probable.

Competing with operators that ultimately controlled supply just didn’t work. The resurgence of MVNOs is based on a new business 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 reading device.

The amount of Internet video viewed on TV doubles in 2010, and the gaming console serves as the primary gateway, accounting for almost half of usage. Developments supporting the console device, such as content availability, existing revenue model, and higher definition programming, are the enablers.