ATLANTA, USA: inCode Telecom, an influential strategy advisor to leading telecommunications companies, enterprises, and private equity companies in North America, today announced its seventh annual Top 10 Telecom Predictions. The 2010 predictions identify emerging business, network, device, and application trends likely to affect consumers and businesses.

Highlights of the 2010 predictions include:

•Consumer adoption of netbooks drives a significant increase in operator data plan sales, but could strain data networks and reveal device management and synching issues.
•The FCC struggles with competing forces regarding net neutrality rules, but eventually permits wireless operators to prevent or limit specific types of traffic as long as operators don’t discriminate.
•Since all mobile phones above entry level evolve into computing platforms, the smartphone as a category dies by 2011.
“The industry is at an inflection point that is perhaps more significant than at any juncture in North American telecom history,” says Rob Chimsky, inCode Telecom Vice President and CTO. “Incremental revenue is shifting from voice to data. However, threats from new competitors offering ‘over-the-top’ business models emphasizing value delivered by applications directly to consumers, rather than simple connectivity, will reshape the industry.”

Each year, telecom watchers await the inCode predictions, known for their insight and accuracy. inCode is one of North America's largest consulting organizations focused on the telecommunications and mobility applications market. The highly experienced consulting team advises top players in the industry including leading wireless, wireline, and cable operators; infrastructure and device suppliers; application and service developers; private equity and venture capital firms; and enterprises that are mobilizing their businesses. Over the previous six years, inCode annual predictions have proved correct about 80 percent of the time.

inCode 2010 Top 10 Telecom Predictions

1. Wireless Operators Push Netbooks, but They Prove a Mixed Bag

Netbooks continue to gain momentum in helping wireless operators sell incremental data-centric plans, even to existing customers. Consumers in developed markets are more likely to use netbooks in addition to, rather than as replacements for, cell phones and laptops, so operators can boost penetration with multiple connections per customer. However, heavy data usage by netbook users could place more strain on already-loaded data networks. Operators view netbooks purely as another type of connectivity, like a data card. However, consumers see operator-provided netbooks as full computing devices requiring laptop-type support. They expect seamless synchronization among features such as contact lists for all their wireless devices. Operators will either need to spend significantly to develop these capabilities or outsource them to prevent consumer backlash.

2. The FCC: Stuck in Neutral with the Net

The significant debate on net neutrality rules continues, and FCC efforts to reach a compromise bog down for many months. The potential imposition of net neutrality in wireless already has had a chilling effect on spectrum auctions and rural broadband stimulus participation. Ultimately, the FCC will reach a compromise between network reliability and innovation that is satisfying to no one. The Commission allows limitations on certain traffic that may be detrimental to overall network usage, providing the limits are not overtly directed at particular types of service or specific service providers. Operators will need to find ways to gain traction in an environment encouraging more over-the-top services.

3. Wireless Operators Play “Whack-a-Mole” with Data Issues

Verizon has begun its aggressive deployment of LTE, and AT&T is continuing with HSPA. Other operators are following suit, finally giving wireless users the promise of wireline-type throughput. However, as the RF bottleneck is removed, other equally challenging issues move to the forefront. Operators focus on new backhaul solutions that can cost-effectively handle increased traffic. Additionally, device battery life rears its head further because high-speed data applications and always-on connections drain battery life quickly. Battery innovations have lagged behind RF technology advances, and the severity of the gap increases. Operator coverage—especially in-building coverage—is strained as customers use wireless as a replacement for wireline capabilities. Much time, effort, and capital spending will be directed to finding solutions for these capacity issues.

4. When All Devices are Smart, What Becomes Genius?

Once upon a time, smartphones were high-end devices. However, broad adoption of these models has increased volume shipments. In addition, airtime pricing has become more competitive. These factors are turning smartphone features into table stakes for mid-tier devices. Mobile phones above entry level pricing tiers morph into computing platforms so smartphones as a distinction between tiers ceases to exist by the end of 2010. Today’s smartphone—a device with an open OS, a big display, and full Internet browser—won’t be a standout because all devices are smart. New levels of distinction emerge with high-end units becoming powerful Internet devices with voice calling as a secondary function.