Last year was full of the usual change and disruption for the telecom industry - almost a typical year, except that players outside the traditional telecom sector created some of the most serious threats. Of course the iPhone dominated the headlines for much of the year as did Google's open-source Android alliance in Q4. The big vendor mergers, after being stitched together much slower than expected, produced little except downward earnings projections.
One significant shift is that many of the top operators globally did quite well in 2007, and analysts and industry insiders tell us that mobile and fixed-line players are starting to really understand that what works in the future will be very different than the past. So with an eye to the future, Telecom Asia's editors have sifted through the myriad of technology and business trends and over-optimistic vendor claims and come up with a list of the eight most likely trends to have a significant impact on the industry this year. Here's our top picks for 2008
Ad-funded service: The missing link
This is the year the mobile content value chain will do its best to fill in the missing link - ads.
Banner and classified advertising are the mighty pillars that hold up the world of free internet content. That's because the web has a billion or so active users. Despite the efforts of many, the mobile net is a fraction of that size.
That's changing, partly as a result of faster networks (although DoCoMo has shown over the years that speed isn't everything). Vodafone reported a 45% increase in group data - that is non-voice, non-messaging - revenue in its last result, driven by the increase in 3G and 3.5G users.
A bigger factor in driving change is on the device side. The 2.5G iPhone is generating significant more mobile data use. The 2G iPhone has spawned dozens of touchscreen-based imitators, as will - some time in '08 - the 3G version.
The other impetus for mobile ads will be the contest between Google and Yahoo. Whereas operators, which have built businesses out of charging for airtime or data, are not accustomed to selling ads, those two certainly are.
Both have set their sights on the mobile business this year.
Google is set to bid for wireless spectrum in an apparent bid to become an operator itself. Those plans aren't clear, but it has mapped out its move into the handset space by building an industry alliance to build open-source phones. Google is giving away the software in an effort to stimulate the use of mobile search and other applications that inevitably will be funded by ads.
Yahoo has just announced a new developer platform based on widgets aimed at ensuring interoperability across different handsets with the aim, like Google, of kick-starting the market.
The only surprise is what's taken them so long‾ A more targeted advertising platform than the mobile phone doesn't exist. If you don't like ads online, you're going to hate the mobile net. TA
Security: This year's threats
Human carelessness and crafty social engineering will, as ever, pose the biggest threats to network security in 2008.
But threats from two fresh sources will hog the headlines this year.
The first is social networking sites.
On one side, it's about privacy. In a minor cause cîre among digerati, tech blogger Robert Scoble has just been bundled out of Facebook after trialing technology that scraped the personal data of thousands of members and downloaded them onto his PC.
To some extent users are vulnerable most to the site owners, who are anxious to monetize their data: step forward CEO Mark Zuckerberg, who was forced to dump his Facebook advertising scheme after wrongly claiming it was 'opt-in'.
On the other side, it's about protecting users from phishers. In a recent example, Facebook has disabled a widget called 'Secret Crush' (now rebadged as 'My Admirer'), for enticing users into downloading adware onto their PCs.
A more dazzling example is CyberLover, a Russian bot that fakes it as a chatbot long enough to extract personal information out of men in chatrooms.
PC Tools has posted a warning site about bot. CyberLove is clever, but even smarter is its ability exploit male mating behavior - surely the most reliable path to profit known to humankind - by chatting up ten men every 30 minutes.
The other new threat platform is the mobile phone. Thanks to the iPhone and the leap in mobile data use, mobile terminals are now getting to the volume that makes them worthwhile for large-scale virus and worm attacks.
The first iPhone Trojan was discovered in early January, masquerading as a firmware upgrade. It is apparently harmless - but so were the first PC viruses.
Mobile phone phishers will enjoy a 'first-strike' advantage when they target mobile phones. Expect the first successful attack soon. TA
Sustainable business: The green lifecycle
Hold the front page: the world's going green.
In case you hadn't noticed, climate change has the attention of governments and the corporate sector.
That's a challenge for the IT and telecom sectors, whose combined carbon footprint is about to zoom past the much-scrutinized aviation industry.
The ICT industries are much bigger than aviation, but their carbon emission are also growing at a much faster pace.
The escalating amounts of bandwidth over networks means data center throughput is likewise soaring. Just under a quarter of that footprint derives from data centers, says research firm Gartner.
A UK group, which has just completed a report on the ICT's greenhouse emissions, says the average server has 'roughly the same annual carbon footprint as an SUV doing 15 miles-per-gallon'.
Worse, most servers are vastly under-utilized - as much as 90% of capacity is idle. The likely solution is fast adoption of server virtualization, enabling much more efficient server deployment.
Outside the data center, the telecom sector will find they will have to account for how they are managing their carbon footprint.
Carriers will need to start measuring power consumption of their networks and in particular their data centers.
Smart carriers will build 'green business' into their sales and marketing. It won't stop at the carbon footprint. Inevitably consumers will want to know more about the green lifecycle of network equipment. The same consumers will want to buy greenhouse-friendly mobile phones and make calls over green networks.
On the vendor side, suppliers are already stressing the power efficiency of new equipment: an early example is the redesign of mobile base stations to minimize the need for cooling (see 'Mobile goes green', page xxxx). They will soon be specing out in detail the carbon impact of all solutions.
They will also find telecom procurements will set green specifications and targets.
Just as governments everywhere are creating ministries of climate change, carriers will need to appoint chief climate officer to oversee their carbon reduction plans.
And if a carrier doesn't already have offer mobile phone recycling, it will need to straight away. It won't just be about greenhouse, but the whole green lifecycle. TA
Contactless mobile payments: Get ready to mobilize your wallet
The concept of leveraging wireless smartcard technology to transform the mobile into a payment device has been around for ages, as has the technology to actually make it work. The hard part is, pretty much, everything else besides the actual smartcard - that is, the complicated ecosystem of operators, manufacturers, banks, credit card companies, retail merchants and regulatory framework that has to be in place.
Now that NTT DoCoMo's Osaifu-Keitai service has shown the rest of the world it can be done - and that operators will still have a role to play in POS transactions - various players spent much of 2007 laying the groundwork to make contactless mobile payments happen on a global scale.
Credit card giants Visa and MasterCard launched numerous trials with their respective payWave and PayPass technologies. And both are working with the GSM Association's 'Pay Buy Mobile' initiative, which aims to promote development of an ecosystem of NFC-based UICC cards (like SIMs, but designed to run secure, compartmentalized payment apps) and TSMs (trusted service managers) to govern the provisioning transactions.
Whether the GSMA can connect the necessary dots to make contactless mobile payments a global reality is up for debate, but it has 35 operators on board for the Pay-Bu-Mobile initiative, 11 of which launched live trials in November last year. Even if the trials get off to a lackluster start, at least the ball will be rolling, and that may be all we really needed. Either way, the tipping point for contactless mobile payments begins here. TA
Internet on the go: Untapped opportunities
In markets like the UK, Japan, Korea, Singapore and Hong Kong the mobile internet is quickly gaining pace, thanks to the advent of HSDPA/EVDO and the introduction of flat-rate data tariffs, which provide end-users with the same experience of fixed broadband at a predictable price.
As mobile operators announce plans to roll out HSUPA over the next two years for improved uplink capabilities, uptake of mobile internet services is also expected to grow strongly beyond mature markets.
According to ABI Research, these upgrades will significantly lower the cost of delivery of services as capacity will grow approximately five- to tenfold, and make such social applications like instant messaging and mobile 2.0 multimedia entertainment services like YouTube more viable for operators to offer. This will also make the mobile internet a more appealing experience for end-users.
'From 2009, mobile operators in developed markets will not be worrying about coverage any more, but will be concerned about making sure their networks are all-IP compliant and capable of handling the increasing mobile data traffic flows,' said ABI Research.
Meanwhile, there is also an enormous opportunities in emerging markets, where mobile phones outnumber personal computers, and mobile and 3G is anticipated to be the main way to bring internet access to the masses.
In India, for example, mobile phones outnumber PCs 10 to 1. With the country growing its mobile subscriber base at a CAGR of 67%, it's hardly surprisingly that the number of those accessing the internet on their phones is much larger than those doing it on their PCs at home or internet cafî„. A similar trend is seen in Thailand, where internet penetration is as low as 13% in comparison to 82% for mobile penetration.
The mobile internet is forecast to start to take off as regulators in these markets gradually give out 3G licenses. If nothing else, the GSM Association's push in introducing low-cost 3G handsets for emerging markets is also expected to help accelerate the adoption and usage of the mobile internet. TA
LBS: Location, location and location
Despite years of slow development, location-based services are poised for strong growth over next few years, as handset vendors are increasingly looking to integrate GPS functionality as a value-added product differentiator and mobile operators are looking at introducing various GPS-based services to increase ARPU.
According to ABI Research, global shipments of GPS-enabled mobile phones are expected to grow from around 240 million units in 2008 to over 550 million in 2012, with revenues rising from over $50 billion to $100 billion during the period, boosted by convergence trends and technological advances in low-cost GPS receiver integration and improved indoor coverage.
While the growing adoption will be driven by increased availability of GPS-enabled handsets, it is believed that it will be the application rather than the technology that will make the LBS market sexy and interesting over the next few years. Already mobile operators, handset makers and navigation application developers have come up with attractive LBS offerings, such as the bundling of navigation and map content with mobile devices. Also internet giants like Yahoo and Google are extending local search and map proposition with Mobile Web 2.0 applications.
Research firm Telematics Research Group suggests that the increased importance of wireless connectivity, either to the internet or the cellular network, is opening up new world of services and capabilities by bringing together accurate location-based data with advanced and rich point-of-interest data, including pricing, inventory and user-generated content such as ratings of local businesses.
'In the years to come navigation-enabled mobile phones will be used for auto navigation, pedestrian navigation and many other types of location-based services,' said Egil Juliussen, principal analyst for TRG.
Recent acquisitions by Nokia (Navteq) and TomTom (Tele Atlas), Juliussen says, point the way toward the coming battle for the GPS consumer segment.
Required for success in the GPS market of the future will be connectivity, inexpensive maps and rich point-of-interest content - addresses alone will not be enough,' he added. TA
Internet TV and P2P video: IPTV's latest challenger
This year should prove to be a banner year for IPTV, though not necessarily in the way you might think. To be sure, there will be lots of new service rollouts this year, but they could well end up competing against more than just the local cable TV company - or even each other - thanks to the rise of internet TV and peer-to-peer (P2P) streaming video.
The obvious poster child for the P2P video movement is Joost, started by the same people who gave you KaZaa and Skype. Launched last year and in beta since October, Joost uses a P2P architecture to stream broadcast video from multiple peers simultaneously, effectively turning viewers into broadcasters at the same time.
But it's also happening in China via local start-ups like Vakaka, PPLive and UUSee. And starting this year, Joost is reportedly coming to play via a partnership with Tom.com.
The business case for P2P video isn't that clear yet, but then neither is IPTV's. What we do know is that P2P video is internet-driven and, more importantly, advertising-driven. That means it can offer for free what IPTV players are planning to charge subscription and download fees for. And it's not a piracy issue - broadcasters like the BBC, NBC and Viacom have already signed deals to distribute content via P2P.
Granted, P2P video has a lot of challenges ahead of it, like its bandwidth-hungry nature and the fact that users are doing the transmitting can only exacerbate net-neutrality issues. And it's debatable whether internet TV can really make the transition to the living room at the moment.
But it is indicative of how viewing habits are changing, and IPTV operators may well have to either figure out how to keep their viewers away from the P2P competition - or figure out how to harness the technology for themselves. China Netcom, by the way, is already doing it - its IPTV infrastructure uses a P2P architecture. TA
MPLS and Carrier Ethernet: Mayhem in the metro
For the last few years, the common wisdom for telcos beefing up their metro networks was to deploy MPLS. Between its aggregation transport credentials and ability to handle complex portfolios of emerging broadband services - and the fact that MPLS now pretty much dominates core networks anyway - there was little reason to think otherwise.
But MPLS in the metro seemed somewhat less of a fait accompli last year as interest grew in Carrier Ethernet, which promised a simplified, elegant and cheaper metro alternative to complex, clumsy, costly MPLS.
The catch is that PBT isn't finalized as a standard, which raises interoperability concerns, while some critics have questioned the real cost savings that PBT will offer. That said, MPLS proponents who have rubbished PBT have responded with Transport MPLS (T-MPLS), a trimmed-down version that purportedly addresses many of the concerns that network engineers had over cramming MPLS in the metro.
Meanwhile, PBT has seen small but growing support from a number of carriers - BT being the most vocal, but Verizon and Deutsche Telekom have also expressed interest. This year, NTT will be putting PBT through its paces as well. And the Carrier Ethernet Ecosystem initiative, led by Nortel Networks, now has 22 vendor members on its roster.
The question carriers will face in 2008 is whether to push forward with MPLS in the metro or wait and give PBT a chance. And vendors on both sides will be fighting tooth-and-nail to make their case. TA