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inCode, a VeriSign Company, Announces Top 10 Wireless Predictions for 2008
Key trends expected to drive the wireless world in 2008 include Google’s
foray into the market, the rise of mobile advertising and the battle
between WiMAX and LTE
Mountain View, Calif., Dec. 19, 2007 – inCode, a VeriSign Company,
today announced its Top 10 predictions for the game-changing events
that will shape the wireless industry in 2008. The predictions cover
major trends ranging from who will win the communication standard wars,
what role Google will play in the wireless world after January’s spectrum
auction and whether or not consumers will finally open up to digital
content and mobile advertising.
The predictions, first created in 2003 by inCode,
a global business and technology consultancy acquired by VeriSign in
November 2006, are designed to help wireless industry players, partners
and consumers better plan for the coming year.
“The coming year is going to be incredibly important
for the wireless industry as new business models begin to take shape,”
said Jorge Fuenzalida, vice president of communications consulting for
inCode, a VeriSign company. “Beginning with the spectrum auction in
January, to the continuing battle between fourth-generation (4G) technologies
LTE and WiMAX, to what it’s going to take to make converged wireless
a reality, wireless will look significantly different in several critical
ways one year from today.”
2008 predictions highlights (full text follows this
release):
- The WiMAX/LTE wars will end with a whimper. The long-awaited
"take-off-the-gloves" battle between next-generation wireless
technologies LTE, HSPA and WiMAX will not occur since they are in different
stages of maturity, with HSPA already enjoying widespread adoption and
a flourishing device market.
- A new wholesale carrier will emerge. The 700MHz spectrum auction
presents a large opportunity for the emergence of a new wholesale carrier
(i.e., no retail operations or direct customer) that focuses on being
the most cost-effective player in the market and avoids the retail game. The
wholesale carrier model will be driven by companies such as Google –
but the question remains: How much control will Google be able to garner?
- Peer-to-peer (P2P) technology goes mainstream. Long used for
pirating files, US distributors follow the UK's lead and begin to utilize
next-generation, secure and DRM-protected P2P for mobile content distribution.
- For the eighth year in a row, mobile service quality will continue
to deteriorate. The combination of new technology (3G), multi-band,
multi-access technology, advanced and complex handsets, least-cost routing
and under-investments in network coverage have made mobile services
less reliable than they were before the introduction of 3G.
inCode 2008 Top 10 Predictions for the
Global Wireless Market
- RF Technology Convergence Will Finally Start to Materialize
Prediction: The likelihood for global harmony is greater than
ever; HSPA will continue to grow rapidly and the elements around LTE
will be OFDM-based. The long-awaited "take-off-the-gloves"
battle between LTE, HSPA, and WiMAX will not occur since the three technologies
are in very different stages of maturity, HSPA is a mature technology
with more than 10 million users around the world today and with a flourishing
device market. WiMAX is still a technology in a very early stage with
trial networks around the world and most likely with one to two more
years before commercial volumes are reached. LTE is even further away,
and with normal technology maturity timelines it will not be a commercial
technology until 2012. With increasing development cost and vendor consolidation
it is likely that it is in all parties’ interest to allow LTE be the
first time ever we experience full global harmonization RF technology.
- A New Wholesale Carrier Will be Born
Prediction: The 700MHz spectrum auction in the US presents
a large opportunity for the emergence of a new wholesale carrier (i.e.,
no retail operations or direct customer) that focuses on being the most
cost-effective player while avoiding the retail game. The wholesale carrier
model will be driven by companies such as Google and will operate at
a lower cost per minute, leverage technologies such as software-defined
radios to support multiple standards and utilize offload techniques
such as WiFi/femotcell that reduce spectrum requirements. This will
also gain traction from MVNOs that want to move away from relationships
with traditional carriers. Carriers have always had both retail and
wholesale sides, and that duality has never allowed the MVNOs sufficient
margin on which to thrive. The debate will consist of how much control
Google and other potential bidders will want in the end.
- Device Proliferation: Open Access as an Emerging Business Model
Prediction: Open access and strong competition in the chipset
industry will push device and handset vendors to bypass carriers and
build closer ties with the end user. Given the diversity and increased
data usage of devices, we will see a great effect on open access rules
and how subsidies are determined – including the use of advertising
options, certification and even security models. For instance, the move
from traditional cellular, where there is a somewhat closed system with
high security, creates a need for security on the fly with devices that
just "appear." All told, the open access model is an opportunity
to provide more differentiated services, but the downside is the elimination
of subsidies by carriers for devices. This will be supplanted by advertising
support subsidies, and customers will therefore have to trade carrier
contracts in exchange for dealing with advertising in order to receive
low-cost or free phones.
- Quality of Service Differentiation – The
Road Begins This Year
Prediction: Service stacking and quality will become very important,
especially after the 700MHz auction and consolidation chapters close.
When the number of players decrease, options on offerings increase –
and carriers will change focus from expanding the network to optimizing
the customer experience. The shift to IP networks and open access will
create greater motivation and opportunity to look at real quality of
service distinctions for carriers selling to customers. On the low end,
end users can use a pure open access network, where one brings his or
her own device without subsidies and receives services that are offered
on a best-efforts basis. On the high end, users can get very high reliability,
priority access, and QoS guarantees that provide consistent experiences
on VoIP and other applications. There are also multiple levels in-between. Customers
will self-select service based on the performance they want and the
price they are willing to pay. Carriers will also be able to match costs
of service much closer to the prices paid, rather than the situation
today in which all minutes generated by all customers are essentially
equal. There may be differences at the customer care or sales support
level, but not in the actual provision of services or overall policies. In
summary, when the real estate is bought up and you can't build out,
you build up.
- Wireless Broadband
is More About Speed Than Mobility
Prediction: We will finally have an answer for why European
operators invested so heavily in 3G seven years ago, given a positive
outlook for consolidated carrier markets for the next 3-5 years. Wireless
broadband will continue to be the fastest-growing service since prepaid
and SMS. Customers love it, but since it is priced and sold as a DSL
service, there is very little focus on the strength of the cellular
technology (i.e., mobility). Significant implications will revolve around
the usage model, transport network and, equally important, revenues.
Operator differentiation is more about a personalized service that best
leverages a simplified user experience and customer support. 2008 will
be a breakthrough year for broadband – HSPA will be the dominant technology
in this space until LTE is commercially viable, and it will be increasingly
embedded in laptops while WiMAX will be embedded in certain consumer
devices. This trend will also boost the laptop market as it they will
be better connected than ever before.
- P2P – From Theft Model
to Business Model
Prediction: P2P becomes mainstream as a technology. Long used
for pirating files, US distributors follow the UK's lead (e.g., BBC,
Channel 4, Sky) and begin to utilize next-generation, secure and DRM-protected
P2P for content distribution. Media delivered via IP/Internet/broadband
will completely blow apart the "walled garden" relationships
created over the years. In addition, there will be major impact on services
such as Slingbox/Echostar. Major studios and broadcasters will increase
the rollout of over-the-top services (a la NBC Direct, Hulu), following
fast on the heels of what BBC and others have already done. As "over-the-top"
media takes hold for legitimate services, and the best of download services
are using P2P, ISPs move from blocking and tackling (traffic shaping,
etc.) to building strategic relationships with providers and media distributors.
Again, the consumer wins!
- In-building and Femtocells – Show
Me The ROI
Prediction: In-building will play a large part in carriers'
strategy to fill in coverage gaps, driving increased ROI for enterprises
and average revenue per user (ARPU) for carriers. Carriers will follow
an "inside out" strategy, enabling coverage that focus on
where the most lucrative customers are (e.g., enterprise, in-building)
instead of blindly blanketing a city with coverage. Carriers will be
looking at low-cost, low-power femtocells as a way of increasing coverage
and capacity, fostering customer loyalty, investigating offloading strategies,
and reducing operating costs. However, unresolved technical and business
issues such as wireless interference problems, what devices caused them,
what channels are impacted, lack of a good managed service/business
model, closed access, and competition from WiFi will make 2008 the year
of heavy buzz with little actualization.
- Backhaul Makes a Haul – A
Move From Wireline to Wireless
Prediction: As the carriers roll out 3G infrastructure and
continue to introduce bandwidth-intensive data service offerings, the
backhaul portion of their networks must be optimized and/or upgraded
to ensure that the service quality is not compromised. Most backhaul
is comprised of leased TDM facilities provided by the fixed line carrier.
As a result, backhaul will represent a significant operational expense,
in many cases totaling as much as 30 percent of a carrier’s annual network
operating expense budget. Carriers cannot continue to scale their backhaul
using leased TDM facilities when data traffic is growing exponentially
and will begin to explore other options for backhaul including fixed
wireless, HFC, Carrier Ethernet, DSL, and fiber. In addition, the high
cost of real estate to mount antennas and high costs per megabit will
impact microwave deployments in North America. One trend that will help
reduce microwave cost significantly is a move away from point-to-point
architectures toward point-to-multipoint designs.
- Mobile Advertising Gains Steam – Will
it Stick or Get Stuck?
Prediction: Mobile advertising will become a significant event,
sponsoring content and driving innovation – so much so that carriers
will no longer look at their business cases on a strictly subscription
basis. In fact, subscription-based models will lose again to advertising-based
models, replicating what happened on the Internet. It is not just the
carriers who are building advertising steam. Google, for example, is
a $200 billion market value “advertising” company, and the carriers
are sitting on precious assets – the wireless networks – that should
be leveraged and monetized. By addressing services such as intelligent
search, location-based search, and other tie-ins with a variety of content
and product partnerships, carriers who understand this fact will begin
generating sizeable advertising revenues in 2008. Why do you think Google
launched Android?
- Mobile Device Security – The
Internet Brings its Security Baggage On the Road
Prediction: Not only does the popularity and number of iPhones
continue to increase (and make way into enterprise organizations), the
significance and sensitivity of data on these devices also continues
to rise. A major iPhone security incident will raise the awareness of
and need for mobile device security. This will therefore create and
drive a new market for mobile device security software as well as mobile
device management software and services.
Finally, as a bonus prediction, the wireless industry
has a tremendous opportunity go back to basics in response to consumer
demand for more reliable phone service:
Back to Basics, Please!
Prediction: Mobile service quality will continue to
deteriorate for the eighth year in a row. The combination of new technology
(3G), multi-band, multi-radio access technology, advanced and complex
handsets, least-cost routing and outdated roaming solutions have made
mobile services less reliable than they were before the introduction
of 3G. This means more dropped calls, poorer quality calls, and more
failed call set-ups for the user. There will be a growing market for
more robust phones with a single band, fewer features and longer battery
life for people that are really dependent on a reliable phone service.
About inCode
inCode (www.incodewireless.com),
a VeriSign company, is a global wireless business and technology consulting
firm. inCode develops and implements high-impact strategies and solutions
to help increase the profitability and performance of wireless networks.
inCode also helps guide enterprises in harnessing the power of wireless
communications for productivity and competitive advantage. inCode understands
where the wireless world is going and how to get there first. On Nov.
30, 2006, VeriSign, Inc. (NASDAQ: VRSN) acquired inCode. VeriSign operates
intelligent infrastructure services that enable and protect billions
of interactions every day across the world’s voice and data networks.
Additional news and information about the company is available at www.verisign.co.uk
Contacts
VeriSign EMEA Media Relations: Victoria Henry, vhenry@verisign.com
+44 (0) 20 8600 0723
VeriSign Investor Relations: Nancy Fazioli, ir@verisign.com,
+1 650 426 546
VeriSign Industry Analyst Relations: Katie Hammler, khammler@verisign.com,
+1 703 948 4367
Weber Shandwick for VeriSign: Sneha Nagmoti, snagmoti@webershandwick.com,
+44 (0)207 067 0515
Statements in this announcement other than historical
data and information constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements involve risks
and uncertainties that could cause VeriSign's actual results to differ
materially from those stated or implied by such forward-looking statements.
The potential risks and uncertainties include, among others, the uncertainty
of future revenue and profitability and potential fluctuations in quarterly
operating results due to such factors as the inability of VeriSign to
successfully develop and market new products and services; customer
acceptance of any new products or services, including the Kontiki DMS;
the possibility that VeriSign’s announced new services may not result
in additional customers, profits or revenues; and increased competition
and pricing pressures. More information about potential factors that
could affect the company's business and financial results is included
in VeriSign's filings with the Securities and Exchange Commission, including
in the company's Annual Report on Form 10-K for the year ended December
31, 2006 and quarterly reports on Form 10-Q. VeriSign undertakes no
obligation to update any of the forward-looking statements after the
date of this press release.
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