News From Telecom World

Telecom: 2009 predictions

Posted on: January 5, 2009

“Dropping an ‘F’ bomb”: the new expression in the Total Telecom office for any mention of the word “femtocell”.

And femtocells featured more than once when we, the editorial team, gathered our thoughts and set down our predictions for the telecoms industry in 2009.

“People working on a viable femtocells business model still won’t get anywhere. Operators will run out of patience and either embark on ill-fated commercial launches, or abandon any notion of a femtocells proposition altogether,” said one staff member, confidently.

But another was more forgiving, suggesting that “the industry will finally accept that, although there are some interesting niche areas where femtocells could thrive, they will never be a mass-market solution.”

As usual, we’re not naming the individual team members to spare our blushes, to avoid having to witness people doing the smug victory dance this time next year (see Futurology: What happened next for the results of last year’s predictions.), and possibly to spare ourselves a lynching from disgruntled readers with vested interests. The predictions are from online and magazine staff, both in the U.K. and overseas.

We are not only sceptical on femtocells though. There were a number of predictions looking at what will not happen next year.

“Mobile TV will not take off,” said one member of the team, a comment that drew little argument from the rest.

“The Internet will not fall over due to a deluge of data and insufficient operator investment in network capacity,” said another.

But opinion was divided on telepresence, of all things.

“Telepresence will not take off in 2009,” one of us said.

However, “operators will find they can’t meet data centre needs as demand for managed hosted services increases, particularly for telepresence services,” insisted another.

Let’s hope a fight doesn’t break out in the New Year!

“In the current economic climate, big brands will be even less keen to spend money on unproven mobile advertising campaigns, so they won’t,” predicted someone in the U.K. office.

A sobering thought for operators looking for those all-important new revenue streams.

Money talks
Naturally, the financial crisis featured heavily in our thinking.

“The financial turmoil will hit carriers, system vendors and component players hard,” said an overseas editor, echoing all of our thoughts.

“Many of the existing system vendors and component vendors that experienced the dotcom crash are expert at survival, but what is different this time is that the supply chain is far more fragile with far fewer players making the same equipment. This is especially true in optical components.”

Another team member suggested that the financial crisis will hit “in particular those divisions providing enterprise services.”

And as usual, many of us singled out the vendors for special attention.

“Nortel will either go bankrupt or sell off all networking businesses and just retain its enterprise operations. It could then be bought by a larger company,” said one of us.

But another went further still.

“Huawei will offer to buy Nortel. Regulators will have a field day trying to stop the deal going ahead, if this year’s failed 3Com buy is anything to go by.”

Things are also looking gloomy on the devices side.

“Mid-tier handset manufacturers will continue to have a rough time. We can expect to see a wider range of mini PCs subsidised by mobile operators,” said one editor.

As usual, U.S. whipping boy Motorola took some flak.

“Motorola will find any way it can out of the mobile handset business, probably by spinning off its devices business… to a museum,” said one bright spark.

“There will be friction between Motorola co-CEOs Greg Brown and Sanjay Jha as it becomes increasingly evident that a devices spin-off will not be an easy thing to achieve,” added another.

“The lack of new products in the pipeline to replace the RAZR will not help matters.”

But we see one handset maker’s star continuing to rise.

“Apple, keen to build on the momentum generated by its first two handsets, and in a bid to take on Nokia, RIM and Android phones, will unveil another handset,” a team member predicted. “It doesn’t matter what it looks like or what it does, because press coverage is guaranteed. It will probably be made out of hemp.”

Things will also be tough on the mobile operator side.

“LTE trials will continue but operators are likely to hold off on investment in networks. We could instead see moves increasingly to HSPA+,” said one editor.

Meanwhile, “mobile broadband will get a reality check and operators will have to start improving HSPA coverage,” s/he added.

“Consumers will get increasingly frustrated about the quality of service on mobile broadband dongles,” another editor agreed.

“The credit crunch could see people ditching expensive mobile contracts in favour of pre-paid, SIM-only offers. This will also hit handset makers, as replacement cycles continue to slow. Fixed-line providers may benefit as price-sensitive users revert to using the landline to make calls,” one of us suggested.

Alternatively, “Skype will become increasingly popular as a recession-busting way to beat mobile charges – 3 UK’s best seller,” said another.

Internet players and network issues
“Carl Icahn will continue to make his presence felt in the industry. He will continue to be a thorn in Yahoo’s side in the near term, but will ultimately move onto a new victim,” one of us believes.

“A move to unseat U.S. president-elect Barack Obama seems unlikely, although not impossible, but North American telco execs should be on their guard,” s/he added. “The fact that the investor still holds shares in Time Warner could come into play.”

Meanwhile, “things will continue to look bleak for Yahoo. By this time next year the Internet company’s brand could have disappeared completely,” one of us said. “At the very least, the company will have to broker some sort of deal with a rival company to survive.”

A tie-up with Microsoft seems like the most likely option.

“Microsoft will explore other ways it can compete with Google,” said another team member. “It might mean a revised deal with Yahoo for its search business, or even acquiring a company like Mozilla, which makes the increasingly popular Firefox browser.

In addition, “in light of Google’s and Apple’s mobile adventures, Microsoft will also push its mobile operating system increasingly towards the consumer segment,” s/he added.

Despite our earlier assertion that the Internet will not fall over, we are seeing growing demand for network capacity next year.

“Deployments of PON will go 10 Gbps and Ethernet will go 100 Gbps,” said one of our non-U.K. team.

“Backhaul articles will start appearing in the FT,” another one of us thinks.

Around the world
Global markets also provided us with inspiration, and here’s one prediction that could come true even before we’re back at work in January:

“China will probably come out with some form of licensing, but it will do something unexpected and TD-SCDMA is unlikely to remain a standalone offering,” one team member said.

Or, “China will trigger a global trade war after finally handing out its mega-dollar 3G vendor contracts, but giving all the business to Huawei and ZTE,” said one of our roving reporters.

China Mobile reportedly awarded TD-SCDMA network contracts recently, and while Sweden’s Ericsson did take a small portion of those deals, the bulk did indeed go to Chinese players.

In Hong Kong, PCCW controlling shareholder Richard Li will end 2009 as he began 2008, 2007, 2006… still searching for a way to cash out of PCCW,” said one international editor.

In Africa, “there will be consolidation as the large operators try to buy out all of the smaller players, throughout the continent,” another team member thinks. “By the end of 2009 there will be three or four giants operating in Africa: MTN, Zain, Orange and maybe Vodafone, depending how quickly the last moves on expanding in the market when the Vodacom deal is done,” s/he added.

Furthermore, “there will be at least one rumour of a merger between MTN and another big operator,” one of us said. “Depending on funding, the deal might (or might not) go through this time around.”

And turning to North America, “Verizon will offer to buy Vodafone out of Verizon Wireless,” said one of our U.K. staff.

“Cisco will emerge as a fully-fledged service provider,” another concluded.

As the saying goes, only time will tell!

Source: Total Telecom

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