Mobile advertising to gain steam in 2008

BANGALORE, INDIA: inCode, a VeriSign Company, has 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.

1. RF technology convergence to materialize

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 technology is still 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 the world experiences full global harmonisation RF technology.

2. Birth of new wholesale carrier

The 700MHz spectrum auction in the US presents a large opportunity for the emergence of a new wholesale carrier 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 like software-defined radios to support multiple standards and utilise offload techniques such as WiFi/femotcell that reduce spectrum requirements.

The debate will consist of how much control Google and other potential bidders will want in the end.

3. Device proliferation: open access as emerging biz model

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, 2008 will see a great effect on open access rules and how subsidies are determined.

The open access model is an opportunity to provide more differentiated services, but the downside is the elimination of subsidies by carriers for devices.

4. Quality of service differentiation Service stacking and quality will become very important, especially after the 700MHz auction and consolidation chapters close.

When the number of players decreases, options on offerings increase and carriers will change focus from expanding the network to optimising 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.

5. Wireless broadband: speed over mobility

Wireless broadband will continue to be the fastest-growing service since prepaid and SMS. Significant implications will revolve around the usage model, transport network and, equally important, revenues.

Operator differentiation is more about a personalised 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.

6. P2P: from theft model to biz model

P2P becomes mainstream as a technology. Long used for pirating files, US distributors follow the UK's lead (such as BBC, Channel 4, Sky) and begin to utilise 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.

7. In-building and Femtocells: show me the ROI!

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 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. Competition from WiFi will make 2008 the year of heavy buzz with little actualisation.

8. Backhaul makes a haul: from wireline to wireless

As the carriers roll out 3G infrastructure and continue to introduce bandwidth-intensive data service offerings, the backhaul portion of their networks must be optimised and/or upgraded to ensure that the service quality is not compromised.

Backhaul will represent a significant operational expense, in many cases totaling as much as 30 per cent of a carrier’s annual network operating expense budget.

9. Mobile advertising gains steam

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 monetised. 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.

Well, why do you think Google launched Android?

10. Mobile device security

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.

The wireless industry has a tremendous opportunity go back to basics in response to consumer demand for more reliable phone service. 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.

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