inCode, a global business and technology consulting firm, has released its Top 10 Global Wireless Predictions for 2006. Some key market changes for the coming year include: fierce competition that will leave only five handset manufacturers standing, new business models enabled by converging access technologies and new mobile entertainment brands.
"We see two major developments in the market," said Jorge Fuenzalida, director, inCode Technology. "First, new entrants are challenging existing business models, especially in mobile music and mobile TV, which is increasing market competition. Second, network operators are working fast to monetise 3G networks, which cost billions of dollars to deploy. If these operators can better align device design with market-leading applications, they can be at the forefront of a smarter, more nimble wireless industry."
1. New entrants in mobile music battle the iTunes model
The popularity of ringtones and music downloads has proven that wireless subscribers want mobile tunes. However, if the music industry really wants mobile music to take off, it should control its greed and work with others in the value chain to align pricing, promotions and download times across all access technologies (WiFi, cellular, etc). Also, look for a digital music innovator to take the industry to a new level of handset/device 'coolness' and launch a mobile virtual network operator (MVNO) focusing solely on mobile entertainment services.
2. First movers using a new business model disrupt voice services
EBay's recent acquisition of Skype and Skype's deal with German wireless operator E-Plus have accelerated boardroom action. Next year will see a new business model for voice services - the 'new voice' - with advertising as the revenue generator and voice as a loss leader. Most wireless operators will adopt a defensive position, preventing access to their networks to avoid revenue cannibalisation, but an innovative few will launch aggressively-priced services that will rock current tariff plans. Expect the upstarts to garner 5 million users by the end of 2006. These first movers will experience runaway success and be difficult to catch by slower rivals. The market will start to separate between best-effort, low-cost networks and high-quality, pricier networks.
3. Mobile TV struggles, remains an experiment
Video streaming over 3G networks to handsets will not be a 'killer app' any time soon. Instead, subscribers will 'snack' on mobile TV where time value of information is important. Mobile TV could quickly use up significant amounts of 3G capacity, so network operators will attempt to limit bandwidth usage and control the customer experience by promoting downloads of news, sports and music video. Internet Protocol Television (IPTV) remains a wireline game for 2006, but may only become a mobile solution in the distant future.
4. China becomes birthplace of new telecom leaders
China breaks out of its constrained role as a destination for technology transfer and 'just a big market' and takes a leadership position in telecommunications, a crucial infrastructure area for any developing economy. So far, the Chinese have invested in computing and attempted acquisitions in energy and consumer appliances. Wireless could be next with a network operator, handset or equipment manufacturer falling under controlling interest of the Chinese.
5. 3G and WiFi duke it out for dominance
The global 3G handset availability problem will be solved. In Europe, poor 3G coverage, particularly indoors, will damage the user experience and could leave the door open for WiFi to provide a more reliable service in the short term. There is no current vendor solution for this problem, since 3G frequencies do not penetrate buildings cost-effectively. However, margins on standalone WiFi business are thin to non-existent, and WiFi does not offer full mobility. In the US, 3G CDMA coverage is good and getting better. Expect more price cuts as evolution data only (EV-DO) CDMA operators seek to knock out WiFi and compete with cable broadband and DSL.
6. A new 'converged virtual network operator' category emerges
The CVNO will look to the consumer like a marriage of Vonage and Virgin Mobile, combining characteristics of a BYOB (bring your own broadband) Voice-over-Internet Protocol (VoIP) provider and an MVNO. These new operators will attack the convergence space by offering VoIP, mobile voice and mobile data, combining services in new ways that will surprise the industry. In the future, these operators may also add broadband in the form of WiFi hotspots and WiMAX when it becomes widely available. The technology enabling this new operating model is IP Multimedia Subsystem (IMS), the architecture for 3G core networks that allows delivery of IP services in a consistent way to the user device, regardless of the access technology. The first CVNOs will likely focus on combining VoIP over WiFi with CDMA or GSM cellular. In the future, they will look to leverage strong existing customer relationships to gradually grow the customer spend and capture the 'friends and family' network effect. In 2006, at least two announced CVNEs (converged virtual network enablers, which are facilities-based wholesale enablers) will launch this phenomenon.
7. Undifferentiated MVNOs become MVN'F's - managed virtual network failures
In the MVNO world, those businesses with high added-value, complementary retail distribution and a potentially large customer base, such as Walt Disney and Virgin Mobile, will flourish. However, MVNOs that lack differentiation will either fail or be aggregated by a larger player, resembling the shakeout among wireless resellers 10 years ago. In 2006 the first high-profile MVNO will either fail or abandon launch.
8. First 'bit pipe' operators emerge
In 2006 the first network operator will depart from conventional wisdom and ditch its retail brand on the premise that it is better to be a terrific wholesaler/access provider than a bad retailer. This operator may be backed by a private equity firm and will drive innovation in the market.
9. 3G takes hold before fixed WiMAX
WiMAX, CDMA and 3G technologies, now rolling out worldwide, will be quickly deployed and adopted, especially in urban areas. But when it comes to obtaining affordable wireless broadband, rural and suburban dwellers without access to cable TV or DSL are asking Wi-Not us? It is a big issue across the US. inCode economic analysis indicates that fixed WiMAX could eventually help solve the rural broadband delivery problem if certain equipment costs come down.
10. EV-DO complements BlackBerry, eventually kills WiFi data
Executives and road warriors devoted to BlackBerry devices are developing an additional addiction - to EV-DO. Now available from Verizon and Sprint Nextel in most US markets, EV-DO enables fast, convenient attachment downloads. However, users are more likely to view EV-DO as a complement to, rather than a replacement for, their purple phones. This year EV-DO pricing is reduced again and displaces paid WiFi because EV-DO offers mobility. The order of preference will become: 1) laptop on free WiFi, 2) laptop on EV-DO, 3) paid WiFi.
© Technews Publishing (Pty) Ltd | All Rights Reserved
printer friendly version