2007 Telecom Predictions - Review of the Best
We'll leave you to decide. Does a collection of a dozen sets of 2007 telecom predictions make a wise crowd or a demented mob? Anyhow, we've had a bit of fun puling together some of the highlights and lowlights of the analyst, media and blogosphere outlook for 2007.
Outlook from the 'Blognoscenti'
We aren't going to review every item, just pick some of the more interesting ones. VoIP industry godfather Jeff Pulver kicks us off with this one:
While the hype surrounding Fixed Mobile Convergence (FMC) will grow during 2007, the FMC marketplace will continue to stagnate until such time that software becomes widely available for dual model phones that offer seamless roaming across unaffiliated wifi/wimax hotspots.
This seems to be a common theme, and we're not alone in suspecting that FMC is a dead-end for consumers in its current form. Extending cellular coverage in-building (the bit users care about) looks like something best left to... well, cellular technology. Until you start adding features and capabilities, IP is just adding overhead. It'll take an innovator like Apple to kick-start that process.
He also has some good news for equipment vendors:
TDM services will continue to be "end-of-lifed". All Telecom operators will be IP-based within 5-7 years.
We'd agree, but then as we're about Making Money in an IP World, we would, wouldn't we? But then again, if you're a TDM switch vendor, you're in the interesting position of having the right sales force, support, brand and customer relationships ... to sell Cisco IP gear to telcos. [Boss -- are we allowed to say this out loud?] Jon Arnold's probably right that there are too many vendors chasing too few large capex deals.
Fellow blogger Dean Bubley predicts the emergence of the corporate MVNO. You can imagine an operator with a good network but poor distribution to corporates doing this in alliance with a systems integrator or IT behemoth (or both). This would fit our "pipe" and "platform" Telco 2.0 strategies. The smarter the operator, the better they'll do at "white label" handset logistics, support and billing -- with the pipe just being a hygiene factor in any deal. One to watch.
He also suggests:
[Location-based] navigation becomes rather more important on mobiles. Mobile search doesn't.
This fits with our outlook too. Communications beat content. As we said before, the specific case of rendezvous in time and space is important. These generally trump information and entertainment. The GSMA found the same thing in their research. Mobile search will take a long time to mature: users are looking for information to advance them to their next objective, and today's search just isn't geared to it yet. A big opportunity for a future year, or an already solved problem?
In a shock finding, we're going to disagree with one of Delphic Keith McMahon's prognoses:
With data access, I see 3G completely nailing WiFi as prices of data access tumble.
Normally, coverage beats speed every time in telecom. "Distribution" is the winning meta-strategy. However, in this case there's a tussle between physics and economics. WiFi needs a lot of access points (costing more), but like a crowded room at a party, they whisper to neighbours rather than shout across the room, allowing for more overall traffic. WiFi also doesn't suffer from the overhead of usury spectrum costs. We'd probably see a co-evolution of both technologies, with ultimately a closer alignment of provisioning, security and payment methods, and the users will care less and less about which is which.
An electric issue remains the role of local government in enabling local connectivity. We'll be delving deeper into this in our Digital Town session at the next Telco 2.0 event. Our take: whilst "municipal networks" per se will fade from the headlines, government procurement will get more organised, and investors will be less tolerant of duplicative infrastructure, resulting in new modes of network funding and ownership emerging.
Maybe it's not important, but a lot of blogger lists for 2007 barely mention the giant telecom industry. You're background noise, your products boring, your brands aren't worth talking about?. Just a rumour of the icon for Apple's purported new spreadsheet app was big news today. You don't see the same customer adoration of telcos anywhere.
Enter the analysts
In-Stat have made their #1 2007 prediction easy to come true by choosing something that's already happened: HDTV content downloaded via the Internet. On a less barbed note between competing analysts, they pick up on the WiMax trend, specifically noting:
At least one successful WiMAX "d" vendor will go out of business as the transition to "e" comes to a head in 2007.
WiMAX will be more widely deployed in Europe and Asia than in North America.
In other words, mobility will win, and it's expensive to lay underground cables in old cities. We'd buy that. Forbes go further in suggesting that the realities of deployment will push back profitable deployment.
Controversially, In-Stat suggests that...
Longer term than 2007, there will be a backlash against so-called "network neutrality" as the rising amount of rich media content on the Internet slows down other traffic. Today's proponents of net neutrality will begin to plead for tiered service--the option of paying more money for priority on the backbone.
Whilst a telco dream, this is very unlikely to happen. However, alternative forms of tiering (e.g. local vs international traffic caps; blanket "business" traffic priority levels; Paris Metro Pricing) are possible future phenomena. Network Neutrality, will however, not be a hot potato in a year's time, since it's really a mis-labelled bucket of other phenomena (like antitrust) that are better addressed individually.
We're also somewhat sanguine that "The Venice Project's P2P video project [i.e. Skype for video] will be the big viral media sensation of 2007". We think this will prove more difficult to deploy than expected in the face of ISP traffic shaping, bandwidth usage caps, and user habit. As a long-term play it's the right direction, but the jump from YouTube to "TV on the Net" is too big to make yet for the mass market.
Through 2011, enterprises will waste $100 billion buying the wrong networking technologies and services.
We use Skype internally at STL, and probably get the same or better experience as the average megacorp user at a tiny fraction of the price. Their number looks large, but in fact may be conservative. Luckily, the definition of "waste" is pliable enough for our prognostications to never be disproven. Although, given Gartner also predicts the peak of blogging in 2007, we'll predict the peak of over-priced hazy analyst reports.
A couple of Infoworld's guesses have telecom angles to them. The idea of Cisco getting into the anti-virus game -- at the network switch level -- is an interesting thought. Former (pre-merger) AT&T CTO Hossein Eslambolchi used to often be quoted in the press that (in our wording) the centralised function that was worth embedding in a "smart" network was the detection and elimination of negative-value traffic, as the edges find it to hard to co-ordinate the information and response. Food for thought to the Level 3's and Global Crossings, plus the incumbents with their national backhaul networks. Maybe a "clever dumb pipe" isn't such a bad thing after all?
Another of their forecast is that "Mashups Meet SOA". (SOA is "Service Oriented Architecture" -- basically a way of breaking up monolithic IT systems and processes into re-usable chunks that still maintain the integrity of business rules.) Most telco IT departments will already have had their doors battered down by vendors bearing SOA architectures. Few will have thought through the possibilities for changing the business model to embrace external 3rd parties and be part of a wider platform.
Forbes predicts consolidation. We'd agree, as does the blogosphere, but the more interesting part might actually be "deconsolidation" as some telcos break themselves apart (e.g. into retail and wholesale) or are plundered by private equity or leveraged buyout. Maybe 2007 will be a comeback year for Gordon Gekko?