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2008: Five Predictions
|17 января 2008|
700 MHz band, WiMAX, FMC solutions, Open access and new vendors… The 2008 has started.
Prediction 1: 700 MHz auction turns into business as usual
Pundits are excited about the opportunity for players other than the Verizon's and AT&T's to change the landscape of the mobile industry. But will the 700 MHz band really produce a new out-of-the box wireless broadband provider?
Google, which is going it alone in the auction and probably has the deepest pockets out of any potential non-traditional bidder, doesn't appear to be any too gung-ho on the prospect of outbidding telecom incumbents. Back in October, Google co-founder Larry PAGE said: "I think we have many, many different options available to us as a company, in terms of spectrum and connectivity for people in wireless and so forth, so I don't think we feel like there's any desperate need for us to have to bid to win or anything like that. And again, the money is not burning a hole in our pockets."
That doesn't sound like an aggressive bidding strategy to me. Simply put, incumbents such as Verizon have the wherewithal to spend billions on licenses and billions more to build out network infrastructure. That's their core business. And with the 700 MHz band the last of the so-called beach-front property, operators are prepared to drive the price up to a hefty level, especially given the fact that new 4G networks need a nice chunk of extra spectrum, about 20 megahertz, to deliver the broadband data speeds that are advertised.
While a host of alternative operators is a nice dream for the 700 MHz band, we are ultimately going to see the same faces walk away with some mighty expensive licenses.
Prediction 2: WiMAX becomes real; hype dies
Since 1995, Gartner has used the term "Hype Cycle" to describe the over-enthusiasm and following disappointment that typically occurs with new technologies. It lists five phases of a hype cycle that begins with a technology breakthrough, followed by over-inflated expectations and then a period of disillusionment, when the grand pronouncements are gone and little a word is said about the technology. Yet, behind the scenes, businesses continue to experiment to understand the practical applications of the technology. And finally, the hype cycle is over as the benefits of the technology become widely accepted.
WiMAX sits between the over-inflated phase and the disillusionment phase now that Sprint Nextel and Clearwire ended their venture designed to expand the footprint of WiMAX in the U.S. It's unclear just how aggressive new Sprint CEO Dan HESSE will be with the business while Clearwire is courting partners to help it build out the network.
WiMAX is making some good progress on the device and interoperability front, but will have to compete with the stronghold of EV-DO and HSDPA networks, which are far more mature with better coverage, despite the fact they won't be as fast as WiMAX. The increasing availability of low-cost HSDPA and EV-DO dongles aimed at laptop users (Ericsson for one is pushing HSDPA for the masses hard in developing countries) will continue to intensify.
I suspect WiMAX will end up the same way W-CDMA did. Lots of hype, lots of quiet and then wide acceptance. 2008 will be the quiet phase.
Prediction 3: Femtocells still have a long road in 2008
On the flip side, femtocells are just entering the over-inflated-expectations phase of the "Hype Cycle." These router-sized mobile home base stations hold a lot of promise for operators: reduced capex, increased coverage and cheaper services to name a few. Still, a plethora of technical and business problems remain, including a lack of a standard, network integration and cost assumptions. And FMC solutions that involved WiFi are finally making inroads with the number of attractive handsets that are needed to effectively entice consumers. Expect to continue to hear a lot about the potential of femtocells with few deployments that have a market impact.
Prediction 4: 2008 is the great open access experiment
The mantra in 2007 was open access, and 2008 will be about delivering on the lip service. Sprint Nextel is embarking on what will be the industry's first experiment with open access. The operator's WiMAX business, Xohm, revolves around open access and devices that are cheap enough for the consumer to buy outright from consumer electronics players. Verizon Wireless says in the year ahead that it will open its network and enable subscribers to use devices, software and applications from third-party providers. AT&T piped in and said it already offers open access. Regardless of how serious Verizon and AT&T are about open access, the crux of the issue is whether full-priced devices can make an impact in a market that heavily relies on subsidized devices. You can bet that Nokia will be working hard to appeal directly to the consumer, but 2008 will be the great experiment for open access that will have little impact on the consumer.
Prediction 5: Non-traditional vendors will rise up
Higher speed data networks are ushering in opportunities for alternative vendors beyond the big companies such as Ericsson and Alcatel-Lucent. Chinese vendor Huawei saw some significant momentum in 2007 with UMTS deals with the industry's largest operators: Telecom Italia, Vodafone and T-Mobile International. Companies that missed out on the 2G and 3G revolution such as Samsung and Fujitsu are looking to WiMAX to propel them in leadership positions. Look for some aggressive moves from these types of vendors to gain the trust of operators.