What's NOT going to happen in 2011

BANGALORE, INDIA: ABI Research’s annual take on what’s NOT going to happen next year in many of the markets.

Huawei will NOT become the #1 wireless infrastructure vendor in 2011

While Huawei has been conveniently stealing market share from its traditional wireless equipment vendor counterparts, the question on everyone’s lips is: will Huawei become the #1 vendor displacing the long-standing behemoth Ericsson? Huawei is known to have been closing on Ericsson’s lead, gaining 5-6% market share between 2009 and 2010. Huawei is now known to be in the #2 spot closely followed by NSN followed by Alcatel-Lucent and ZTE.

However, 2011 is unlikely to see Huawei gain the #1 spot due to recent market consolidation. According to ABI Research estimates, the merger of NSN and Motorola makes it a strong contender for the #1 position in 2011, overshooting Huawei and closely beating out Ericsson. Huawei seems to be losing steam as deployments in China and India have peaked. The lucrative North American market has been a tough nut to crack for Huawei.

Security concerns in the US have prevented Huawei from gaining some of the recent LTE deals with AT&T, Verizon, and most recently one with Sprint, which is likely to be a big disappointment for Huawei’s regional ambitions. While Huawei is gaining traction in Europe, winning many of the LTE contracts, the fact that LTE revenue is still very much overshadowed by GSM and UMTS proves that the incumbent vendors Ericsson, NSN and Alcatel-Lucent still have a strong position in the market.

China’s FTTH market will NOT be the biggest in Asia!

China is one of the largest broadband markets in the world with more than 120 million subscribers in 2010. The majority of Chinese broadband subscribers are on DSL platform, followed by cable and fiber. In terms of broadband subscriber numbers, China is the biggest broadband market in Asia. However, fiber broadband adoption in China is still behind other Asian countries such as Japan and South Korea.

In 2010, China had more than 10 million fiber-to-the-home broadband subscribers. China Telecom and China Unicom are the country’s main fiber broadband operators. Although fiber broadband deployment is increasing steadily, the availability of FTTH services is limited to some of the big cities. Both China Telecom and China Unicom are planning to invest more on FTTH rollout. However, the network upgrade plans are especially targeting Shanghai, Beijing and some other cities.

The high cost of fiber and the lack of demand for high bandwidth applications are among the major challenges of China’s FTTH development. Vast deployment of video applications such as IPTV which need high speed broadband will drive the growth of FTTH deployment in China. Without government support and attractive new services to offer over FTTH broadband, China’s fiber broadband adoption will not be in the top position among the countries in Asia Pacific.

Next: Carrier Ethernet for backhaul will NOT see a substantial boom in 2011

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Carrier Ethernet for backhaul will NOT see a substantial boom in 2011, and legacy backhaul won’t completely disappear

Belief in a 2011 boom for Carrier Ethernet rides the “LTE hype” and “4G hype” wave. That is, the idea that 4G networks will be begin to ramp up next year in 2011. Many would like you to believe that Carrier Ethernet as well will become massively adopted and become fully incorporated into mobile networks as a result.

Although there will be a boost to Carrier Ethernet backhaul next year, it will be curbed by several factors. Yes, there will be LTE and WiMAX deployments, and they will need Carrier Ethernet backhaul as they are all-IP networks. But the networks won’t be deployed on a large scale, and many other countries are only planning 4G or even 3G networks next year.

Those carriers that do adopt LTE will most likely relegate Carrier Ethernet for LTE only to their initial LTE markets, as opposed to unifying all of their 2G and 3G networks on Carrier Ethernet. Although Ethernet will reduce the carriers’ cost per bit regardless of the mobile standard in use, carriers feel there is a risk in adopting Ethernet for unifying all of their backhaul on one type of network. They would rather have each generational standard backhauled separately to avoid a problem in one backhaul network spoiling and affecting the rest, which in turn would affect customer quality of service.

There’s another myth: that lack of proper synchronization is what is keeping the migration towards Carrier Ethernet from becoming widespread in 2011.

Synchronization techniques to improve legacy protocols over Carrier Ethernet have had a lot of advancements and updates for different protocols. Different approaches from network element vendors have made synchronization less of an issue. An influential factor that is keeping back operators is the CAPEX investment required to switch all of their networks to one Carrier Ethernet backhaul network. Their current backhaul, although not 100% cost-bit efficient, is doing the job.

Even if carriers use pseudowires for their TDM/SDH networks, they don’t want to run the risk of investing resources, placing their 2G and 3G networks on Carrier Ethernet, and having to bear with a transitional period of adjustments. This is, in other words, the “if it ain’t broken, don’t fix it” mentality. They would rather have these on legacy backhaul which has been tried and tested over the past 2+ decades, even though advancements in Carrier Ethernet have proven it to be a reliable backhaul method which has a lower cost per bit.

In 2011, netbooks are expected to remain more popular than media tablets. But demand for devices with embedded mobile broadband modems will NOT overtake demand for external modems.

The USB modem form-factor is convenient for mobile network operators (the leading sales channel for mobile broadband modems) to stock and support. Despite some mobile network operators witnessing a decline in USB modems as a percent of total devices, USB dongle shipments, continue to rise both regionally and globally.

Subscribers are generally opposed to additional subscriptions for each device connected to a mobile network. Instead, they favor creation of shared data plans or ways to consolidate billing.

Further, new 3G (HSPA+) and 4G (WiMAX and LTE) networks continue to launch in all parts of the world, which results in a significant upgrade opportunity for current mobile devices. Few will replace existing devices and computers because they subscribe to a new network. ABI Research observes a nine to 12 month gap from the time subscribers join a mobile network before they consider replacing current devices.

Royalty costs for mobile broadband modem technologies remain significantly less for external modems (which are calculated as a percentage of the device’s total bill of materials) compared to a fixed cost for an embedded modem module.

These trends are resulting in adoption of mobile hotspot routers, with network operators looking at ways to retain subscribers in the longer term instead of merely seeking multiples of revenue per user.

Mobile hotspot routers provide the benefit of a single data subscription (and therefore cost savings) for multi-device users. These intermediary communications devices allow existing Wi-Fi-enabled products to connect to the wireless wide area networks. These devices, while not a significant contributor to modem shipments so far, are postponing the need to replace mobile devices with embedded versions.

The holidays sound like a good time to set up that long-planned home media network. But interoperability issues will be around for a while.

The holidays will be over all too soon, and the “real world” will intrude again. What else won’t happen in 2011?

Next: The carrier community will not handle the traffic explosion!

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The carrier community will not handle the traffic explosion!

Our ostrich-like cousins in the carrier world will have their heads sharply yanked from the hole in the ground

We thought AT&T’s network troubles with the iPhone were the worst our industry has seen but that was just the tip of the iceberg. 2011 will see the number of smart devices such as smartphones, tablets, netbooks, M2M products and cellular-connected PCs skyrocket. All these products will be generating traffic levels equal to, or in excess of, 2010’s iPhone traffic. Our ostrich-like cousins in the carrier world will have their heads sharply yanked from the hole in the ground as networks grind to an agonizing crawl in 2012. Only then will carriers actually start making inroads on adopting more innovative network designs aligned with the usage demands of today.

Femtocell offload will NOT be the solution of choice for countering this data tsunami

While the data tsunami has been washing up on operators’ shores during 2010, many solutions have been proposed to counter the threat, including Wi-Fi, femtocells, core offload, media optimization, caching and CDNs. Most operators are sticking to the path of least resistance and choosing Wi-Fi as the first choice for data offload. Operators are known to be going for desperate measures urging consumers to use Wi-Fi as and when available.

In the process operators seem to be acting against their own self-interest with little concern about the traffic completely bypassing their networks and the resulting loss visibility of the consumer. Free Wi-Fi is winning out in the short/medium term over carrier-integrated Wi-Fi, as the latter is known to have additional cost and management overheads. On the other hand femtocells are still stuck in ‘coverage limbo’ where operators have been unable to break out of the coverage-related churn reduction proposition, in effect missing out on the data offload and capacity enhancement proposition that femtocells bring to the table.

Sorry: Home networking is not going to move to a single standard in 2011.

Home networking is a growing area of interest as more and more devices in the home offer connectivity options. It used to be that the only connected devices in the home were PCs and laptops. Now, TVs, Blu-ray players, mobile phones, tablets, and set-top boxes are all vying for IP addresses. Much of the need for home networking has been covered by Wi-Fi in the home. Wireless home network adoption is on the rise, home network equipment vendors have made setup and maintenance easier, and consumers have become more comfortable with terms such as routers, SSID, and WPA.

However, Wi-Fi doesn’t make the grade for many managed video services requiring high reliability and high bandwidth. As a result, a number of other ‘no new wire’ home network technologies have developed and been deployed for several years. These include HomePlug, HomePNA, and MoCA. Each of these technologies has its own strengths and weaknesses but the one common thread is years of development, trials, and deployments by operators around the world. A lot of discussion has now focused on G.hn (HomeGrid) as a standard to replace these incumbent technologies and offer a single standard that operates over all wire types.

While we certainly believe G.hn will eventually find its place in the market, we don’t believe G.hn will replace all of these other technologies, especially not in 2011. Sigma Designs is one of the first to announce a chipset supporting G.hn. However, this device will not come to market until the first half of 2011. After the chipset is released, operators are going to want time to evaluate and trial the technology in homes. These operators do not typically move very quickly, so we expect to see a long lead time for actual deployments.

All the while, companies involved with the legacy technologies are developing HomeMesh -- hybrid chipsets that support multiple home networking standards, or “glue” technologies that bind two chipsets into a single network. Examples include Atheros which has recently announced a solution combining Wi-Fi, powerline and Ethernet. Broadcom’s acquisition of Gigle Networks positions the company to design highly-integrated SoCs utilizing HomePlug, MoCA, Wi-Fi and Ethernet. So, while G.hn could grab market share by offering operators an alternative, it won’t be in 2011.

Operators that provide femtocells have largely stuck to the consumer market and are expected to expand to the enterprise market in 2011. However when it comes to using femtocells as an offload solution in metro deployments, few operators are likely to tread that path soon. For operators to get their heads around femtocells in consumer and enterprise settings is itself a big leap of faith. Security, management and interference issues are exacerbated in a metro-class deployment where hundreds or thousands of these devices would be lit up. It will probably be 2012 before operators are comfortable with consumer and enterprise femto deployments, giving them the confidence to expand these to the metro.

Next: M2M markets will NOT achieve significant standardization in 2011

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M2M markets will NOT achieve significant standardization in 2011

In 2010, M2M, particularly using cellular technology, hit the mainstream, with a slew of major mobile operator announcements around partnerships, M2M-dedicated business units, new technological capabilities, and so forth. M2M is now commonly accepted as a core strategic remedy to the growing saturation of the traditional voice-centric mobile market.

In response, major international standards development organizations, including ETSI, the ITU, the TIA, and the Chinese CCSA, are formulating standardized frameworks that span across both vertical industries and various communication technologies. Most of these efforts started in 2009 and several are slated to conclude by mid-2011.

But while comprehensive standardized frameworks will eventually be instrumental in reaching the full potential of a connected world, in 2011 they will face two key challenges:

- Mobile operators and third party vendors have already developed and deployed systems that incorporate existing communication standards, but they integrate these into proprietary frameworks. Eventually they will adopt standardized frameworks, but not until forced by overall market development needs, and not until they’ve developed new avenues towards differentiation.

- Vertical-specific standard framework development efforts, such as NIST in the context of the US smart grid, will compete for attention and development activity. This will be particularly true in the areas of smart energy and telematics, and will engender an environment of “too many” standards in the short term that will lead to a temporary pause on the path towards comprehensive adoption of standards.