‘Tis the season yet again of gift giving, holiday cheer, New Year and predictions. 2011 was the year of 4G in the US, with three LTE networks, a slew of new mobile devices not to mention the tablet explosion capturing users' attention. We wrap up (no pun intended) a tumultuous year filled with the carriers, including AT&T, MetroPCS, Sprint, T-Mobile and Verizon, investing in intelligent services equipment related to their network deployments and marketing the superiority of their 4G services and device portfolios.
What will the theme of 2012 be? We predict it will be the year of backhaul, that is upgrading and expanding networks, as operators struggle to meet the quality demands of consumers downloading those new videos, music and games on all of those new mobile devices they'll find in their Christmas stockings. The underlying driver will be content delivery with VoLTE, a critical, new application, which will arrive in mid to late 2012. Not only will content delivery drive new architectures in the data center, it will also accelerate the adoption of cloud as operators struggle to deal with the backhaul issues choking their networks.
ACG has identified emerging and evolving mobile trends in business, network, devices and applications likely to affect providers, carriers and operators in 2012.
VoLTE + All IP drive Quality of Service. The push towards ITUs all IP infrastructures simplifies the architecture and drives down costs, but it comes with a distinct loss of control regarding traffic management. 3G technologies separated voice and data onto different channels; however, the move to VoLTE and all IP infrastructures brings back the need for quality of service in an IP network. Look for network upgrades driven by the need to maintain voice and video service quality and provide service differentiation opportunities as well.
WiFi grows up. Operators and vendors push ahead with HotSpot 2.0 and Service Provider WiFi to address congestion and 4G user behavior, which has people sitting and pounding the network wirelessly. WiFi becomes part of the operator's service strategy, not just a convenience for users.
Hardware roars back, but software takes over. Cisco's ASR 5000 is a case in point. Hardware-driven platforms, which are scalable and processor intensive, provide a high level of performance. But it's the software flexibility that drives the value proposition.
4G coverage is king (or queen), not speed. While the operators tout their 4G speeds, it doesn't do users any good if they are not in the coverage area. VZW will continue its aggressive rollout of its LTE network and expects to cover two-thirds of the population by the middle of 2012; T-Mobile will focus on its high-performing HSPA+42 network to remain the solid #2 4G operator in the US, for now. AT&T's LTE network (sans a T-Mobile merger) will nudge Sprint out of its number three position and is poised to be #2 by the end of the year. Sprint will launch its LTE in 2012 with a look toward 2013 and beyond with Clearwire, LightSquared and others still uncertain about their 4G plans. Who will be the winners? Nearly everyone: consumers, the infrastructure vendors providing all of that RAN, optical Ethernet, IP routing and switching and wireless backhaul gear, not to mention the device manufacturers.
4G goes for tiers. Globally, 4G leaders such as TeliaSonera and Telstra highlight the advantages of a two-tiered network strategy, utilizing LTE in dense urban centers and HSPA+ in the rural areas for broader coverage. In the US, 4G Tiers will be highlighted by devices and plans, with less capable smartphones offering a different experience (and cost) than the high-end devices.
2012 is the year of the device. The past two years have seen dramatic developments in smartphones and the quick maturation of the tablet market. Initiated by the iPad, tablets can now be seen in multiple markets for multiple applications. Killer smartphones that have raised the bar for 2012 are the Samsung Galaxy S II, iPhone 4, Motorola Droid Razr for both LTE and HSPA+ 4G networks. The challenge for the manufacturers is coming up with true differentiation with devices that span enormously broad market segments. The challenge for the operators is how to keep up with demand and traffic. The challenge for the content providers? How to keep that silly smile off their faces as the market continues to explode.
4G starts to split into multiple markets. The postpaid market is extremely homogenous with very basic tiers of service. The prepaid market, on the other hand, is well structured and targeted to different customer bases. Look for the 4G market to go the route of the 3G prepaid market in terms of branding, segmentation and device/plan bundling.
Smartphones get smarter. The new devices become more independent and tax network intelligence to a higher level. Siri is the start of a "normal language" interface that has been in development for years, providing simple access to the multiple applications people use every day, but now no longer need to access individually. With consumer and enterprise apps moving to the cloud, smart interfaces such as Siri will hide the complexity of access and security. Also look for automobile integration in late 2012.
Music becomes a "killer app" or tries to be. With Google jumping into the online music game, linked to all of those android devices, music tries to become not just a service but a hook to keep customers' loyalty. The difference is that once you are on Android, you have a wider range of devices you can move to. Or so the theory goes.
And operators have finally recognized that people need choice. Multidevice plans for individuals finally arrived en-masse with Sprint leading the way and now other companies are planning to follow suit. After a hundred years of delivering service to an address and a couple of decades of delivering service to a device, operators finally get that users have multiple devices and they need a single plane for service to all of them.
Finally, the most important development in 2012 (as in 2011) will be the focus on business models. Operators will become more aggressive as they look for technology (think cloud and virtualization) to service innovation and focus on delivering stronger customer value to increase their profitability and longevity of service.
Chris Nicoll has more than 20 years of expertise as a leader in defining telecom strategy. Chris is the principal analyst for ACG Research's mobility service and is responsible for consulting engagements, client relations and providing thought leadership for the industry. Prior to joining ACG Chris was principal analyst at Nicoll Consulting, where he developed marketing strategy and positioning for leading telecom operators. For more information about ACG's mobility service contact Chris at [email protected].