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Broadband Access
2010: The year we make contact
Smartphones drive next year’s telecom trends
by Samantha Bookman, TelecomEngine
It’s easy to point out that 2010 is the year of the smartphone. These handsets will drive the wireless market and perhaps spark the industrywide economic restart we’re all hoping for.
But the smartphone is also the end product of more than a decade of handset development, network upgrades and buildouts, carrier consolidation, all driven by consumers’ hunger for more, faster, better communication.
So, what trends will we see next year – and in the near future?
Smartphones reign supreme
2010 is the year we make contact, like never before. The smartphone has finally, after years of slow to moderate growth mainly in the enterprise sector, taken the market by storm. Everyone’s grandmother, practically, wants some kind of smartphone, and if they didn’t get it for Christmas, they will be picking one up in the first half of the year.
“Among all the gloom and doom that happened last year in telecom, the launch of the iPhone and Google Android were the brightest sparks in the industry because they really are driving up data traffic beyond an inflection point that we haven’t seen in a long time,” says Dr. Vikram Saksena, Executive Vice President and CTO at Tellabs. “So, despite the downturn, consumers still seem to be buying these kinds of high end devices, especially in developed markets.”
Verizon’s introduction of the latest open-source smartphone, Droid, is ratcheting up the market as well, something that Julie Palen, Senior VP of Mobile Device Management at Tangoe, a telecom expanse management company, sees as beneficial to the enterprise market. “We’re very excited about those things from our perspective, the more complex the environment for the enterprise the better.”
ABI Research reported in December that nearly 1.2 billion mobile devices – a figure including smartphones – shipped in 2009, and that that figure is expected to double by 2014.
Dr. Saksena see tremendous growth in sales in the near future. “As the smartphone phenomenon spreads worldwide – I just got back from APAC, and they’re just starting to see some early phenomenon there – I think this thing will spread globally over the next few years.”
Mobile data traffic jam ahead
All these new smartphone users are going to want data plans, of course, and that spells trouble for existing data networks. A recent Unwired Insight report pointed out that by the middle of 2010, capacity shortfalls may be a significant problem.
Network overload may already be impacting high-population areas, though carriers are being pretty quiet about it if so. AT&T’s little dust-up with Manhattan residents this weekend led to speculation that the carrier is worried about its data capacity in certain areas. And they may not be the only ones.
“Christmas is going to be a very good thing for Android and iPhone, and January’s gonna suck for the IT organization with the high demand of ‘now I want to get my email on these devices,’” Palen says. While she refers to an enterprise setup here, it’s possible to apply this prediction to much bigger regional networks.
Craig Mathias, principal at Farpoint Group, speculated in the above Reuters article that AT&T may have been preemptively trying to ease congestion in the wake of the holidays, as new smartphone owners activate the devices. How many other carriers are quietly doing the same?
4G networks will roll out, regardless of naysayers
I recently got a pitch from an analyst wanting to tell me how 4G networks were not going to be deployed in 2010, no way, no how, and that they were more than two years off. While some aspects of network deployment will indeed take significantly longer than others, I asked if he’d read that morning’s news from northern Europe, where TeliaSonera announced it was rolling out LTE networks in Stockholm and Oslo .
Clearwire Communications, despite a little hiccup earlier this year when the company's merger with Sprint failed to take root, has deployed WiMAX networks in several U.S. cities, including Las Vegas, where visitors to that fair city can purchase $10 day passes to use mobile Internet.
So, fourth generation is not a far-off technology. 4G is needed, soon, and while the initial rollout is somewhat slow (especially thanks to the economic downturn) and limited to countries with a solid subscriber base, it is progressing and will take hold much faster than some analysts predict.
What may take some time in coming is the handsets.
“(On) the LTE side, one of the biggest challenges is there are not going to be, on day one, handsets available,” says Rakesh Vij, Assistant Vice President at Aricent. “So you are going to have dongles – something which is connected to PCs so you have partial access for your mobile access, for your mobile broadband for your laptops, and another two to three years down the line is when you’re going to have handsets with wireless data capabilities.”
U.S. broadband expansion will take hold
Helping speed the deployment of 4G networks in the U.S. is the broadband stimulus package offered by the federal government through its ARRA (American Recovery and Reinvestment Act).
While not without its issues, the fact is that the government is pumping supplemental funds into the broadband expansion effort and is making providers think about how they can turn a profit in historically unprofitable areas, means the U.S. will see broadband networks deploy into areas that would not have seen them for several more years.
How far they will expand, and how successful they will be, remains to be seen. The most important benefit, initially, is the mapping and data collection effort that is just now ramping up. If nothing else, providers will get a much more detailed picture of who exactly has access to broadband in the United States.
SmartGrid continues to languish
One quick (albeit sketchy) method of studying a trend, particularly when you’re a reporter on deadline, is to look at what Google is or isn’t doing in that area. Don’t believe me? Check out the search engine juggernaut’s Green program. Google dedicated some space to an app specifically for SmartGrid-connected homeowners. It’s cool, but I haven’t seen it publicized at all since finding it.
Google’s app development isn’t the only litmus test for the success of SmartGrid. While much talk and some development has been dedicated to the concept in the U.S. and Europe, not much action has taken place. The EU is spending more time hammering out regulations for SmartGrid than actually deploying it.
Consumers now have a tool to better control their energy usage, Gary Thomas, director of PracticaPro, told attendees at the M2M Business Exchange conference in Brussels in November. “But standing in the way of those benefits are a whole raft of technical, commercial and regulatory, social and data security issues, not to mention the small matter of how to engage consumers in the drive for better energy efficiency.”
SaaS/cloud computing gets a grilling
Meantime, cloud computing and SaaS (Software as a Service) are going to face much more accountability in 2010. While some companies have realized profits thanks to the cloud -- Salesforce.com passed $1 billion in revenue from its SaaS-based services this year, SearchCloudComputing.com reports – some researchers are casting doubts on the ability of SaaS to provide enterprises with real savings.
Gartner Research, for example, says cloud computing will grow, but right now it may not have long-term profitability – the firm reports that it’s cheaper in the first two years of implementation but after that, on-premises hardware will provide greater savings.
While cloud computing applications will continue to grow – Metrico Wireless predicts that apps and OS on smartphones themselves will eventually transition into a cloud environment – companies hoping to rely on the trend to reduce opex would do well to spend a lot of time defining what exactly they want to do with SaaS and learning how best to accomplish it.
Asia dominates device manufacturing
Kind of a no-brainer, this one. Asia has been a leader in high-tech manufacturing for several years now, and the proliferation of smartphones and netbooks means more opportunity for companies in places like Taiwan, Korea, and China.
“Pyramid Research predicts smartphones will end up representing 31 percent of the phones shipped this year,” Metrico Wireless said in a recent release.
LBS comes of age … now what?
Google dropped a bombshell on PND (personal navigation device) manufacturers Garmin, TomTom and Nokia in October by announcing the release of its free turn-by-turn navigation app on the Android phone. While TomTom shares took a slight dip just after the announcement, the real impact of Google Maps Navigation has yet to be felt, as the app is limited to phones using the Android operating system. Once it’s available to a wide range of smartphones, watch out.
But turn-by-turn navigation isn’t the only game in town. Creative thinkers are developing a variety of applications that take advantage of location-based services (LBS). Startup developer ZoomSafer in August introduced an app that automatically locks smartphones while their owners are driving. The EU is discussing a “smart road network” utilizing in-car safety systems as well as encouraging discussion on unified transport control applications.
The outlook for LBS is rosy: revenues grew to nearly $2.6 billion in 2009, a 156 percent increase from the year before, and ABI Research predicts that the growth trend will only continue in the next five years, with revenues passing $14 billion by 2014.
Convergence: it’s here
When I was a wet-behind-the-ears telecom writer, the term being batted around the cubicle farm was “FMC,” fixed-mobile convergence. This was the dream, an editor said to me in attempting to explain the concept of FMC – building networks capable of supporting both fixed and mobile communication.
Well, we’re looking at it now. Convergence isn’t quite what was envisioned 20 or ten or even five years ago, but the idea is slipping into place thanks to – again – smartphones and consumer demand for data, data, data.
“It’s no longer about just the phone or the network,” Metrico Wireless writes. “For a time, smartphones and intelligent networks have been viewed as separate entities, but it’s not going to be about one or the other in 2010. It’s going to be about the integration of the two.”
Fourth-generation networks will play a big role in this integration, explains Aricent’s Vij. “Because of high volumes in applications -- we’re looking at HDTV on mobile phones, streaming applications -- all these are pretty much leading to chaos and a lot of data requirements on the network. 3G networks, to a certain extent, can cater part of these applications but not the bombardment which is pretty much coming. … So all this is leading to network migration and the requirements of network migration.”
My favorite year?
All in all, 2010 is shaping up to be a very interesting year, both in the sense of industry trends, and in the sense of the old Chinese curse about having an interesting life. Smartphones may kickstart an economic boom, but inadequate networks could stall that potential before it even starts.
We’re in a precarious place, with networks not quite catching up with demand and finances not quite where they need to be to adequately upgrade those networks. The next few months bear watching.
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