Consulting Group Releases Top 10 Predictions For The Wireless Industry

InCode, a subsidiary of VeriSign that specializes in wireless business and technology consulting, on Wednesday released its top 10 predictions for major trends in the wireless industry next year.

The predictions are meant to help technology vendors and consumers better plan for the coming year, said inCode.

They are as follows:

1. High-speed downlink packet access (HSDPA), a third-generation cellular phone technology, will flourish. It's a mature technology with over 10 million users globally and with an increasing number of devices supporting it, according to inCode. HSDPA won't compete with fourth-generation technologies like long term evolution (LTE) and WiMax since they're in a different stage of maturity. WiMax is about two years away for commercial deployment and LTE is about four years away.

U.S. carrier Verizon last month disclosed plans to roll out LTE for its 4G network, while also adopting a common access platform with Vodafone to provide services worldwide based on the technology. Nearly 24 million subscribers worldwide will be using services based on LTE by 2012, according to Juniper Research.

2. The upcoming 700-MHz spectrum auction in the U.S. will provide an opportunity for a new wholesale carrier that will not sell services directly to consumers. This model will be driven by Google and similar companies, and will employ technology such as software-based radios, Wi-Fi, and femtocells.

According to filings made with the Federal Communications Commission this week, 266 applicants will participate in the auction. They include AT&T, Cablevision, Google, MetroPCS Wireless, Qualcomm, U.S. Cellular, and Verizon Wireless. Google is among the most promising, since its approach would allow different software and hardware providers to use the spectrum to offer inexpensive products and services to consumers.

3. Open access and competition among chipmakers will drive device makers to bypass carriers. Open access will give birth to new services, but on the downside, subsidies that carriers currently provide on devices will be eliminated. There will likely be advertising-supported subsidies, meaning that instead of carrier contracts, consumers will have to agree to receive ads in order to get low-cost or free phones.

4. With a move to Internet Protocol-based networks and open access, there will be an opportunity for real quality of service distinctions for carriers. On the low end, consumers will be able to bring their own devices to a carrier's network without receiving subsidies or the kind of support they currently expect by subscribing to carrier's services. On the high end, consumers can get high reliability, priority access, and quality of service guarantees on applications like voice over IP. Customers will self-select service based on their preferences, including the performance and the price they want.

Verizon Wireless last month shocked the U.S. wireless industry, announcing that starting next year it will open up its nationwide network to mobile devices, software, and applications not offered by the carrier. The carrier said it will have two categories of customers: full-service customers -- those who purchase devices and services from Verizon and receive technical support, and bring-your-own customers -- those who bring their own devices to the carrier's network without full service.

5. Wireless broadband will continue to be the fastest-growing service. HSDPA will dominate until LTE goes commercial, and it will be embedded in laptops for wireless connectivity. Meanwhile, WiMax will be embedded in some consumer devices. As a result, the laptop market will get a boost because consumers will want to buy laptops that are better connected. 6. Peer-to-peer will hit the mainstream as a technology. U.S. distributors will start using next-generation, secure, and DRM-protected P2P to distribute content. Additionally, studios and broadcasters will increase offerings of over-the-top services. Over-the-top refers to being able to download video on-demand and other content over the Internet on mobile devices.

7. Providing wireless coverage inside buildings will become a large part of carriers' strategy, especially when it comes to service enterprise customers. Carriers will enable coverage for their enterprise in-building customers, which bring in a lot of profit, instead of blanketing cities with coverage. Low-cost, low-power femtocells will be a key technology used by the carriers. Technical issues, however, will not take this technology into full swing next year.

Femtocells are small base stations designed for use in homes and offices to help spread cellular coverage inside buildings. They will attract more than 100 million users in the next 5 years, according to ABI Research. Potentially, the use of femtocells can improve indoor wireless coverage and help reduce "in-home" call charges on mobile devices.

8. As the carriers roll out 3G networks and introduce bandwidth-intensive services, they will have to optimize and upgrade the backhaul portion of their networks to ensure that service quality is not compromised. Backhaul will be a significant operational expense for carriers, often totaling nearly 30% of a carrier's annual network operating expense budget.

9. Mobile advertising will drive content and innovation, even causing carriers to give up their subscription-based business models. Advertising-based models will win over subscription-based models, similarly to what happened on the Internet. Intelligent search, location-based search, and other tie-ins with content and products will generate sizeable advertising revenues for carriers.

Mobile advertising sales in the U.S. accounted for $421 million in 2006. That number is expected to reach nearly $5 billion by 2011 in the U.S. alone, according to market research firm eMarketer. Global mobile advertising sales will reach $11.3 billion by 2011.

10. A major iPhone security incident will occur in the enterprise, raising awareness of and need for mobile device security. A new market will evolve for mobile device security software and mobile device management software and services. +