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inCode Reveals Top 10 Wireless Predictions For 2005 before 3GSM

Increased competition among carriers, manufacturers and enterprises  will drive new developments in voice, data and video communications

London - January 25, 2005 -inCode, a global wireless technology and business consulting firm, is forecasting an increasingly competitive landscape in the communications industry as battles among its largest players fuel new developments and services. The fight for supremacy is a trend underlying inCode's Top 10 predictions about the European and global wireless market in 2005.

"We are entering an era when the mix of cooperation and competition among carriers, vendors and enterprises will change fundamentally.  We will move from the warm and cosy world of what is often called co-opetition to the outbreak of almost open warfare for the hearts and minds of customers," says Rob Chimsky, VP/GM International Operations and CTO.

Although the wireless market already is one of the most competitive in the world, inCode firmly believes the battle for customers will intensify even more in 2005.  The consultancy doesn't see 2005 as "open season" in the merger and acquisition market but even allowing for "on the stocks" mergers such as Nextel/Sprint  and Alltel/Western Wireless the consultancy is forecasting that industry economics could force at least one other consolidation between major players in the year and adds that an increase in MVNO activity will mean that the remaining operators will see no competitive relief.

Indeed, inCode predicts that across the world non-traditional players-multimedia companies with powerful content and cable TV arms, major brands with private-label wireless services and even equipment vendors-will all muscle into the wireless marketplace, bidding to win subscriber loyalty with attractive bundled offerings.

"The world's map of wireless companies as we know it could be redrawn on two battlegrounds," adds Rob Chimsky.  "Conglomerates with huge content portfolios will challenge wireless network operators for control of the wireless 'pipe,' forcing carriers to provide differentiated, compelling services for enterprises and consumers.  In addition, the typical accepted, decades-long relationship between carriers and equipment vendors will cool as manufacturers use music delivery and exclusive offers to attract wireless customers and marginalise carriers.

"But the industry players all need each other so this will be the year of the uneasy relationship," he added.

To strike back, inCode believes wireless operators must strengthen their competitive advantage with these new weapons:

inCode's European consultancy business is headquartered in Paris with offices in Brussels and London. The company is exhibiting at the 3GSM World Congress, Feb. 14-17 in Cannes, Hall 3 Stand J12.

The predictions:

 
1. Wireless Gets into the Multimedia and Consumer Product Bundle

Strong multimedia and cable TV brands must have wireless to round out their service bundles to customers. In addition, big consumer brands need wireless to enhance their customer loyalty programmes. To date, Europe leads the way with Mobile Virtual Network Operator (MVNO) relationships - in which wireless operators provide turnkey, private-labelled wireless services for major brands. In 2005 that trend continues with several huge multimedia companies entering the wireless market by mid-year and dozens of other companies getting ready to follow suit.

Bundling is the initial step toward true wireline and wireless convergence across all-IP networks-about five years away. Eventually, Voice-over-Internet Protocol (VoIP) will support delivery of all voice services, whether the subscriber is at home, on the move or at the office.

2. The Killer App is Dead, Differentiated Voice Lives

In a highly penetrated and segmented market, a single killer application doesn't exist and carriers should stop looking for it. Plain-vanilla voice represents about 95 percent of wireless carrier revenue, but it has become a commodity. In 2005, network operators finally begin to offer different classes of voice services, including priority communications, and one-to-many or many-to-many services, such as network-based cellular conferencing, group voice messaging and more. Enterprises and consumers value better, faster communications by paying for tiered, premium voice services. The trend begins in Europe, but rapidly pops up in North America, Asia and Latin America as well. No new wireless voice services have appeared since the introduction of commercial push-to-talk services and cellular voice mail in the 1980s. These fresh service options surprise and delight subscribers, bringing new revenue streams to carriers.

3. Integration of Broadband Devices Takes Off

Wireless carriers are making broadband technology choices from the available options, including W-CDMA, 1xEV-DO/DV, TDS-CDMA, Flash-OFDM and WiMax. Some of these are personal (Bluetooth and infrared); others local (various flavours of 802.11, fixed wireless and WiMax); and the remainder wide area (UMTS, EV-DO, Flash-OFDM, HSDPA and UMTS-TD). To a degree, each tries to compete in another's space. Manufacturers will begin to integrate devices so they will work across two or more types of networks; devices bridging cellular and WiFi networks will be first. However, WiFi data roaming won't take off to any meaningful degree. Carriers initially protect their networks and their investments in technologies by refusing to let other carriers' customers on their networks, taking us a giant step backwards in terms of the advance of roaming.

4. Carriers Battle to Control Content, with Trends Towards Recorded Programmes

High-performance phones and increased over-the-air throughput speeds are supporting a richer set of downloadable content. A new battleground is emerging over who controls the value of this content, and carriers will have to fend off non-traditional players. Equipment vendors try to directly attack new revenue streams - for example, Apple and Motorola have teamed up to deliver music content to iPods.  This new content battleground will intensify in 2005 with new services at its heart.

In addition, the trend toward viewing recorded versus live programmes, which started with VCRs, continues in the wireless environment. Wireless devices with multi-gigabyte storage enable unprecedented freedom and convenience for customers. They can download, store and view the content they want, when they want and where they want. Those who missed the latest episode of "Survivor" or "West Wing" can record the programme and watch it commercial-free from their airline seat during a business trip. Or anywhere else they choose.

5. Taking Wireless Seriously, Enterprises Begin to Demand Service Quality

Enterprise CIOs finally begin to mobilise their organisations as device and network performance meet expectations and enterprise wireless applications continue to emerge. With number transparency prevalent, enterprises apply wireline cost reduction strategies to their wireless spend. Corporations move big blocks of employee phone numbers to the carrier that best meets their budget and mobility needs. Using this volume business as leverage, they demand service-level agreements (SLAs) that ensure quality of service, not just quality of the network providing it.

Carriers must accept these SLA demands or prepare to lose high-value customers. Opportunities arise for enterprise network management companies that develop applications enabling enterprises to measure SLA compliance.

6. The Battle for Customers Moves from the Highway to the Hallway

Increased traffic has degraded overall network quality, and subscribers are far less tolerant of dropped calls. In-building coverage becomes a big differentiator for corporate and consumer wireless users. Customer collateral material begins to include coverage information on the square footage of key indoor spaces-such as large office buildings, shopping malls and stadiums-in addition to the square miles of highways and motorways in the service area. Enterprises begin to deploy dual-mode 802.11/GSM devices as a means to save cellular costs and improve their own in-building wireless coverage.

7. Spam Spares Wireless No Longer

The wireless industry focuses aggressively on protecting subscribers from handset spam-limited and out of the limelight until now. However, several high-profile spamming incidents will occur next year. Wireless carriers counterpunch with spam-stopping technologies and policies that could ultimately help clear the way for permission-based, mobile marketing by major brands.

8. Adult Entertainment Makes its Mark

All forms of adult entertainment-gambling, games and pornography-provide tempting revenue sources for carriers. The operator's need for increased ARPU will outstrip the pace of implementation of effective controls to block the delivery of unsuitable content to under-age subscribers. This raises the spectre of Legislation to protect minors from unsolicited or inappropriate content.

9. The Role of Wireless in Public Safety Takes Centre Stage

The key public-safety communications tool for decades, wireless becomes even more significant worldwide in the wake of the 9-11 Commission report, which highlighted weaknesses in U.S. telecom infrastructure. Behind-the-scenes issues, including priority access for first responders, network interoperability and reliability, spectrum requirements for public safety and critical infrastructure concerns move to the forefront.  In the United Kingdom, Germany, the Netherlands and Scandinavian countries, momentum slowly is gaining for a wireless E112 emergency dispatch system similar to E911 in the United States.  In the interests of homeland security, governments will move closer to allowing Radio-Frequency Identification (RFID) tags on containers that pass through customs at international ports and national borders. Use of these electronic seals that detect tampering also would speed container movement, benefiting shippers and trade. Did we say that wireless in public safety is important?

10. Who's Who on Wireless - Directory Listing Gets a Wobbly Start, but Wins Over Small Businesses

In the US, opposition to a full-blown white pages directory of wireless subscribers is widespread and strong with Verizon leading the charge. Based on privacy and spam concerns, it's unlikely that the project will get far. However, a 'Yellow Pages' cellular directory - covering home-based and small businesses - proves popular and profitable first of all in America but then gains support in Europe. Think of all those SoHo and SME businesses that are away from their offices most of the day. Their mobile device is their primary mode of voice communication and a Yellow Pages listing is valuable to them.

Feedback:

At the Congress, inCode will invite delegates to vote and comment on the predictions and will publish the results on the last day of the trade show.

Visit inCode in Hall 3, stand J12, at the 3GSM World Congress, Cannes Feb 14-17.

About inCode

inCode, a global wireless technology and business consulting firm, develops and implements high-impact strategies and solutions that increase the profitability and performance of wireless networks. In addition, inCode guides enterprises in harnessing the power of wireless communications for productivity and competitive advantage. inCode's innovative Next Generation Wireless Technology Lab enables wireless carriers and enterprises to test advanced wireless solutions prior to making major capital investments.

Founded in 1998 by wireless business veterans and technology pioneers, inCode understands where the wireless world is going and how to get there first. Headquartered in San Diego, California, inCode has offices in Atlanta, USA; Maidenhead, United Kingdom; Paris, France; and Sao Paulo, Brazil. inCode is an ISO 9001 certified company.