Wireless Operators

Five themes for wireless in 2009

Mark Lowenstein — Thu, 18 Dec 2008 11:06:49 -0500

This is the time of year when various industry pundits opine with their "year-in-review," "predictions," and related columns. My contribution to this effort is to outline five broad themes that I think will govern the wireless industry in 2009.

To help frame the discussion, I would say the development with the most far-reaching effect was the launch of the iTunes App Store, as it represents the next stage of what a phone can be used for. It has galvanized the development community, driven users toward flat-rate pricing plans, and shored up optimism about continued data growth, which is contributing to continued commitments to high capex.

Of course, the second half of the year has been dominated by the broader economic picture. Its effect on the wireless industry cuts across many of my key themes for 2009.

1. Battle for the home

The economic situation is helping to accelerate a trend that has been developing for years: people giving up their landlines. This will take some interesting new twists in 2009. First, we will see much greater competition in "family" plans, as wireless operators focus on household net present value. We have already seen this over the past couple of months, with aggressive and differentiated offerings from Sprint, T-Mobile, and MetroPCS, as they try to compete in an area dominated by AT&T and Verizon. Data plans, and how they figure into the "family share" nomenclature, will be a focus of activity.

In 2009, we will also see the introduction of a number of femtocell-based offerings. The integrated telcos will attempt to leverage their fixed line (phone and Internet) businesses as part an effort to offer "household" plans that make less of a distinction between fixed and wireless.

Finally, users want greater flexibility in pricing plans. This is in part due to the economic situation - where we have seen a rise in prepaid and other non-contract options--as well as the increasing role of the device in the operator selection.

2. Next phase of broadband wireless

This is a corollary to the "battle for the home" theme. The economy and continued high prices are contributing to a notable slowdown in the growth of PC-based broadband wireless services. But there will be lots of energy in this sector in 2009, driven by a host of new devices, such as the $100 Acer netbook being sold at RadioShack, and the continued expansion of 3G networks (AT&T, T-Mobile, Leap and MetroPCS). Also, as Clearwire builds out more markets, expect the cable companies to offer a mobile "extension" to their home broadband customers. Expect "quad play" offerings from the integrated telcos as well. I also believe there will be a wave of price competition for broadband wireless services, with new thresholds being set in the $30 range.

3. Consolidation

Consolidation will be a broad-based industry theme in 2009, and will touch nearly every sector of the wireless economy:

Operators. US Cellular, Leap, and MetroPCS are among the remaining "regional carriers," so expect some consolidation here. I also believe that data might drive the next wave of consolidation, as I don't think there's room for six or more 3G/4G networks in this country.
Infrastructure. Several leading infrastructure players are experiencing tremendous difficulty, despite a still reasonably positive global wireless capex picture. With base station prices falling through the floor, and tremendous development around cheaper and alternative forms of wireless infrastructure, there are too many suppliers. It is also possible that the challenging economy will hasten the movement toward LTE as the primary platform for 4G networks, at least in North America and Western Europe.
Operating systems/development platforms. Apple and Google have become an integral part of the application development environment over the past year. Developers are both energized, but also frustrated at the 10 or so operating systems that exist in wireless today. We are already seeing developers and device OEMs coalescing around a smaller number of platforms, which will result in attrition in 2009.

I also expect a wave of consolidation in a number of crowded "sectors" in wireless. With VCs starting to rationalize their portfolios and the select few players with cash out there bargain hunting, we will see the emergence of one or two "winners" in key categories, such as location services, browsers and "on-device" platforms (widgets and so on), mobile search and advertising, femtocells and other flavors of micro, pico, etc., and application stores/mobile storefronts.

4. Focus on "cost" creates opportunities

Operators would rather not slow down capex or product development spending, given the pace of data traffic growth and innovation in devices, content and applications. This creates opportunity for increased savings on the cost side of the business. Three areas of attention include:

Backhaul. After many years of talking about cheaper backhaul, we'll see some action in 2009. Lower backhaul costs is one of the reasons operators in other geographies can have profitable businesses on much lower ARPU.
Billing and customer care. There will be greater emphasis on the Web and on-device capabilities for self-care, so expensive calls to agents can be used for higher-order issues. One might also see operators seek alternatives for servicing issues that are afield from their core value proposition.
Gateways/platforms. Wireless operators today run a dizzying number of platforms and gateways for different applications: SMS, email, voicemail, MMS, music, video, location, and so on. This silo approach is costly and complex to manage, and prevents a more integrated user experience.There is no quick solution here, but look for some attempts to integrate some of these platforms and reduce the number of vendors under management.

5. Next Chapter in Search, navigation and advertising

The past year has seen a dramatic improvement in mobile browsers, and the range of content available for mobile devices. But the ability to quickly and easily search, discover, organize and navigate to and within all of this content will be an exciting area of product development over the next couple of years, and will include:

Intensified phone browser competition. Continued product evolution, led by Apple, Google, Microsoft, Mozilla, Nokia, Opera and Novarra.
Improved voice search capabilities. There have been well-received voice search applications for the iPhone and the G1.
On-device portals. Users can more quickly move between different applications, or snack-able content, without having to constantly load Web pages. Also, look for better ways to view content "offline."
Improved contextual search. The first phase of this focused on distinguishing between on- and off- deck content. We will see greater effort to deliver more relevant to results to the end-user, such mobile-optimized content, or more intelligent results based on the user's location, previous searches and categories of interest.

I also think we will begin a new chapter in mobile advertising in 2009. Budgets for mobile ad campaigns are tepid, but with the growth in mobile browsing, I think we will see greater attempts at creating a mobile version of the Internet model, based on click streams and contextual search. Tighter partnerships between major operators and the portals (Google, Yahoo, Microsoft) will be an important foundation for this growth. Also, expect some early and cautious efforts around the collection and sharing of subscriber data to enable more targeted advertising.

Mark Lowenstein is managing director of Mobile Ecosystem. Click here to subscribe to his Lens on Wireless newsletter.

4G Vision: Can wireless be embedded in every device?

Sue Marek — Wed, 15 Oct 2008 11:54:04 -0400

Every vendor and carrier now has a vision for embedding wireless in all types of devices, from laptops to digital cameras to home appliances. With penetration rates nearing 90 percent, it's clear that the industry must continue to propel growth and this is one way to do that.

This morning I moderated a lively virtual panel session on this topic with some excellent speakers, including AT&T's new president of emerging devices, national distribution and resale Glenn Lurie. In this newly created position, Lurie will head up AT&T's initiative to bring wireless connectivity to new consumer electronics devices and applications--including personal computers, mobile Internet devices or mini computers, in-car entertainment and navigation systems, cameras and machine-to-machine communications solutions.

Lurie's role seems very similar to that of Verizon Wireless' executive Tony Lewis. Lewis is Verizon's vice president of open development and he is charged with developing Verizon's open device and application initiative. I interviewed Lewis at CTIA I.T. & Entertainment Conference last month in San Francisco and he talked about how the carrier is working closely with device makers and distribution partners to build momentum behind this "wireless in every device" vision.

With the appointments of Lurie and Lewis, it is apparent that the big wireless operators are committed to making this vision a reality. It's now a question of getting the business model figured out--i.e. how will carriers charge for wireless access? Will they subsidize the devices? And perhaps more importantly, getting the distribution system and the retail partners to make this vision a reality.

Please check out this panel and all the sessions during today's "Future of 4G" virtual event. All panel sessions will be archived for several months. Register here.

And don't forgot to check out our third installation of the "25 Most Powerful People in Wireless." Today we continue the countdown with No. 11 through 15. Of course, I'd love to hear your feedback on the list. Weigh in with your own Top 25 picks in the comments section. Click here to see the newest members of the list. -Sue

Sandvine, Acme Packet push into broadband wireless

Mon, 31 Mar 2008 15:01:19 -0400

As the wireless industry moves solidly toward a broadband world, it is beginning to attract companies that have historically played in the wired broadband DSL and cable markets.

This week, Sandvine is showcasing a service control platform, called the PTS 14700, aimed at tier-1 mobile operators designed to give operators visibility into subscriber data trends and consumption, opening the door to new customized services such as quota management, value-based billing, advice-of-charge, and content zones that facilitate and encourage more mobile data usage.

Sandvine is demonstrating the platform over WiMAX in conjunction with Nortel this week.

"This creates advantages in rapid service creation and innovation," said Tim Donnelly, co-founder and executive vice president of marketing. "The data component is increasing in popularity and creating an opportunity to leverage better applications and subscriber behavior to create new services."

Sandvine has been around for six years, targeting the fixed broadband market. The PTS 14700 is an evolution of its already proven platform in that space. "We've had terrific take up in the wireline environment and started to engage wireless operators that have different characteristics: lower data rates but higher subscriber counts," Donnelly said.

Another prominent fixed-line company is making bigger inroads into the wireless market this week. Acme Packet, a session border control solution provider, is introducing its Open Session Routing (OSR) architecture and products along with an ecosystem of partners to deliver SIP-based fixed-mobile convergence.

The OSR architecture features Acme Packet's Net-Net Session Router, a session routing proxy, working with routing database products and services from Acme Packet's ecosystem partners.

"Tier-one wireless and wireline service providers are looking for more open, scalable and cost-effective core session routing solutions that can evolve as their networks do," said Seamus Hourihan, vice president of marketing and product management at Acme Packet. "Several tier-one deployments of Acme Packet's Open Session Routing solution signal an impending sea change away from monolithic, session-stateful products to session-stateless routing proxies leveraging best-of-breed routing databases."

Flat-rate Revolution

Fri, 22 Feb 2008 06:59:59 -0500

Flat-rate Revolution

When it comes to world of complicated wireless rate plans, simplicity is suddenly all the rage. On Monday three of the Tier 1 wireless operators (Verizon, T-Mobile USA and AT&T) debuted $100 per month unlimited voice rate plans. Overnight, it appears operators became willing to cannibalize their customers that are on higher-priced rate plans of $150 and $200 per month in order to offer the allure of unlimited calling for $100 per month.

The majority of consumers are on wireless rate plans in the $50-$70 per month range so it seems as if the $100 per month plans will likely be most appealing to business users who want predictable monthly cell phone bills. Alltel Chief Marketing Officer Frank O'Mara says that Alltel believes the "sweet spot" for wireless voice is around $50 per month. The company, which offers unlimited calling to certain phone numbers within a subscribers "circle" found that when it launched its MyCircle plan in 2006 offering unlimited calling to 10 numbers for $59, the plan attracted existing customers but not a lot of new customers. However, when the company offered a second MyCircle calling plan for $49 and unlimited calling to five numbers, it saw a lot more traction from new customers.

For now O'Mara says that Alltel is going to stick with its MyCircle rate plans and not jump on the $100 per month unlimited calling bandwagon.

However, the real loose cannon in this mix is Sprint Nextel. The rumor mill has been churning that Sprint may join the unlimited rate plan game but with a less-expensive offering at $60 per month. If that should happen, it will likely trigger a price war among the operators. In addition, I think it will have a huge impact on smaller operators such as MetroPCS and Leap Wireless, which have built their entire business propositions around unlimited calling plans in the $35-$60 per month range. Leap Wireless' spokesman Greg Lund says that unlimited calling plans are the right value proposition for its customer. So far the company isn't worried about competition from the Tier 1 operators with their $100 per month unlimited rate plans. "We haven't seen this as a particular threat because of the price differential," Lund says.

I certainly hope the Tier 1 operators remain cautious about dropping their prices on these unlimited rate plans. The flat-rate pricing game is a low-margin business that has to be carefully managed. Right now networks can probably handle any additional voice traffic that the flat-rate plans attract. However, if the price goes down, traffic will surely go up and quality of service will suffer. -Sue

Wireless: The undercurrent of CES

Wed, 09 Jan 2008 06:59:59 -0500

Wireless: The undercurrent of CES
Years ago when I would attend the Consumer Electronics Show, I would spend most of my time in the wireless pavilion of the show floor visiting with handset makers and accessory manufacturers that would dominate that area. I rarely ventured away from the designated wireless portion of the show floor because there was no need to look elsewhere for mobile products.

Flash-forward to the 2008 CES and that scenario no longer holds true. While there is still a designated wireless area, called Wireless World, it only has exhibits from a handful of firms: Qualcomm, Sprint, Nokia, UTStarcom and a few others.

But that doesn't mean that wireless doesn't have a significant presence at the show. It's actually prevalent all over the conference--embedded in in-car navigation system booths, displayed in the laptop and handheld computer exhibits and present at the gaming booths. It's clear that wireless is becoming a requisite part of most consumer electronics devices.

And when I say wireless, I don't just mean WiFi. This vision of wireless connectivity for all devices extends beyond WiFi to include WiMAX, HSPA and 1xEV-DO. Wireless companies are embracing that vision and firms such as Qualcomm, Motorola and Ericsson and others are now structuring their businesses to sell WiMAX, 1xEV-DO and HSPA technologies to consumer electronics device makers. Ericsson's Mobile Broadband Modules business unit believes that by 2011 more than 50 percent of all new notebooks will have embedded HSPA.

Of course, one of the first to talk to me about wireless connectivity being embedded in every consumer electronics device was Barry West, the president of Sprint Nextel's Xohm Business Unit. West and his team have championed this vision for a long time and it appears that finally others are following their lead.

But I'm still unclear on the business model for this vision. How will wireless operators provision and charge consumers for all these devices that access their networks? I've heard rumblings of "family plans" for devices, in which carriers charge consumers a minimal fee for every extra device they have on the network instead of setting up individual accounts for every device. I'm not convinced this is the answer and I hope that operators are thinking of a variety of different pricing plans. We know from experience that without the right business model, this vision will not succeed. -Sue

P.S. See more of our CES coverage here...

Sound off - Industry Players Discuss Verizon's Open Access Announcement

Fri, 30 Nov 2007 10:44:57 -0500

Here's what members of the wireless industry are saying about Verizon Wireless' Nov. 27 announcement that it will give consumers the option to use any application and any wireless device that meets minimal technical requirements on its network.

"I think the reality of the open network is that Verizon is saying you can have it but you don't really want it. Some of you think you want it, but you are just geeks. If you are a serious customer, you will need us. And we love you and we have the best network." -Iain Gillott, founder, iGR Research

"This is another encouraging step towards the wireless industry recognizing the value of openness. We look forward to working with wireless operators, including Verizon, to maximize a Skype user's ability to choose to have their conversations wherever, whenever and however they would like." -Christopher Libertelli, senior director of government & regulatory affairs, Skype

"I believe this move was inevitable. The only uncertainties were which carrier would take the lead and when it would happen. Kudos to Verizon for recognizing the immediate benefits it accrues as well as the longer term strategic implications. Networks are going to be open; and carriers have a choice as to whether they will have control or be controlled. Open networks will spur innovation -- good news for developers. Yet, the impact on carriers, who have spent billions of dollars building their networks, will be substantial. Open access will force carriers to look to something other than their own applications and content --or find a new means by which to bring their offerings to the forefront of an already crowded deck -- to augment declining ARPU. There are still a number of unanswered questions such as: the means by which increasing consumption of data will be managed, and who will have ultimate responsibility for customer care. Stay tuned." -Stephanie Grossman, CEO of digital SIDEBAR

"The Verizon announcement of Any App and Any Device on their network is interesting for a number of reasons but we all know that it was made because of the mounting pressure being brought on network operators by Google and others who believe in full open access for wireless networks. I believe that Verizon will open their network but they are also responsible for protecting the network against attacks, rogue applications and devices--hence the statement that the device and applications must meet minimal technical requirements. With 60 million customers they cannot afford to let a single device or application bring down a portion of their network even for a few minutes. When the Internet is unavailable to us, we just accept that because there is no customer service beyond our on DSL or cable provider for Internet issues. However, Verizon and other network operators do have customer support and they cannot afford to have their lines jammed by unhappy customers because one data hog has had a negative effect on the network.

"Having said that, with open access there will be a different pricing model. We do not have unlimited wireless bandwidth. Those people who are used to drinking from the Internet using a fire hose will now have to understand that they will have access to the same type of performance as the fire hose SOME of the time. So we will see different pricing models emerge. If you use wireless broadband for email and other light data requirements you will pay less for the service then those who want to download a streaming video or two from the Internet. In other words, the limited, shared bandwidth we have available to us over wireless will be available based on the volume of data we require and the time of day we request it. A feature movie downloaded at 2 p.m. in the afternoon will cost us more than if we download it at 2 a.m. because of the difference in network traffic.

"Verizon is the first but not the last network operator to offer up a more open network but we need to understand that it will still be a managed network and that their responsibility to make bandwidth available for ALL of their customers all of the time will still be a prime concern of theirs."-Andrew Seybold, founder, Andrew Seybold Inc.

"We fully support Verizon's 'Any Apps, Any Device' option and feel this will be another important way for CDMA service providers to offer their customers a choice and set the bar for a new level of innovation and growth. Allowing consumers to download and use applications, content and servicesÃ‚Â outside any one operator's walled garden Ã‚Âis evidence of healthy evolution in the wireless world. As long as devices are certified not to interfere with network performance, this initiative will help open the playing field to other innovators and allow only the best networks, operators and services to thrive." -Perry LaForge, executive director, CDMA Development Group (CDG)

"Like a lot of people, I'm pumped about Verizon's open network announcement. This will bring more investment dollars to an industry that is already on fire, drive innovation which will lead to better products and services. Super.
I'm worried about the consumer though. Sure, innovation means more choice, but choice isn't always the best thing. Think about it. Five years ago, it was really complicated to figure out what wireless products to select. Since then, the complexity of options has compounded by orders of magnitude.
There's a study called "The Paradox of Choice," in which psychologist Barry Schwartz discovered that too much choice becomes "not only unproductive, but counterproductive-a source of pain, regret . . ." In Blink, Malcom Gladwell shared research showing that reducing the selection of jelly flavors from 24 to six varieties sent jelly sales skyrocketing.
We're seeing it in our own research of online shopping behavior for wireless. Consumers are spending increasing amounts of time evaluating and considering their options. They go to carrier sites, third party sites, blogs and then start over again before they can make a purchase decision. This will get worse, possibly even become paralyzing as Schwartz suggests unless we come up with a way to make all of these emerging variables digestible for consumers to consider." -Adam Guy, General Manager, telecommunications and media, Compete Inc

"Open Access will mean different things to different people in the mobile value chain. One thing I'm willing to bet on, though, is that Verizon Wireless' "open access" approach won't mean "inexpensive, unlimited, mobile broadband" access, which tends to be what users and application developers dream of having. It's one thing to allow any technologically capable device (i.e. CDMA EV-DO) to use the network, but it's another to let that device use it for a pittance.

"I can imagine VZW only offering "unlimited," flat rate service bundles to selected devices or providing a multi-tiered rate plan that has much higher rates for devices that aren't managed and controlled by the carrier. They can't afford to give away the service, after all, just in the name of "openness!" In their announcement they seemed to be saying users will only have to pay for what they use (which sounds like metered kilobyte pricing to me).

"Providing a more open development environment for application providers and device innovators, however, is a very good thing, even if it comes at a price. For that much, anyway, we can be optimistic this announcement will advance the mobile data industry rather than just provide another dark alley to explore." -Jim Grams, president, Black Oak Associates

"The US and global wireless and mobile industry is shifting from a traditional closed transmission-specific radio system to the future Open Wireless Architecture (OWA) service-oriented convergence platform for he complete openness and simplicity of the users' mobile handset device. We are very glad to see that Google, China Mobile, Verizon, Sprint and some major vendors including Intel, Oracle, Qualcomm, TI, NEC, Motorola and Ericsson are realizing the great value of such openness as they drive this global movement. In the long run, future wireless communications will follow two laws: open radio spectrum and open wireless architecture." - Prof. Willie Lu, chairman of World Wireless Congress, former Stanford University professor and former member of the FCC Technological Advisory Council.

FEATURE: Sound off - Industry insiders discuss Verizon's open access announcement

Fri, 30 Nov 2007 06:59:53 -0500

Click here to read more thoughts from industry insiders...