By Brough Turner, SVP & CTO, NMS Communications
As the year draws to a close, pundits make predictions for 2007. I thought it might be useful to highlight some happenings in 2006 which may not have gotten the coverage — or the perspective — they deserve.
Death of traditional fixed-line telephony
The abortive Vonage IPO demonstrated that providing traditional phone service, even with a few extra features, is no longer enough. Skype has shown the cost of voice telephony to be near zero (once you have broadband connectivity) and that the value is not in per-minute connectivity but in features that help you coordinate getting connected. Traditional operators are counting on their first-mile monopolies and/or on triple play bundles to hold their business together. That will undoubtedly work for a while, but the long term is now clear — voice telephony is an application with features, benefits, and business models more like email or instant messaging.
Dual mode (mobile & WiFi) phones off to a slow start
Despite extensive hype and many product introductions, mobile VoIP did not take off. We did see many product and service launches as startups in every part of the world went after a slice of mobile voice revenues. But there are a lot of details to work out yet, not the least of which is battery life during WiFi operation, WiFi coverage, dual-mode handoffs (or lack thereof) and inadequate 3G data bandwidth. This looks like a trend that will take three to five years to play out.
Some positive results of the U.S. AWS spectrum auctions
While this year’s spectrum auction saw no new players, it did solidify existing players and give hope that the U.S. will have five viable national competitors for mobile broadband access. The biggest winner was T-Mobile USA which is now positioned to be a full-scale national competitor (along with Verizon, Cingular, and Sprint) using a 3G UMTS network they plan to roll out during 2007 and 2008. Add in national WiMAX networks by Sprint and Clearwire and the ever-expanding assortment of WiFi hotspots, and U.S. mobile broadband access becomes quite competitive.
Questioning the value of Calling Party Pays (CPP) regulation
For many years, it’s been accepted wisdom that the EU regulatory scheme, in which all mobile fees are paid by the caller, is the best way to foster mobile adoption. Now economists have shown that CCP has little impact on mobile adoption rates and, by replacing competition with regulated termination fees, it produces substantially higher costs for mobile users. As a highly political issue, it’s unlikely to be resolved for years, but 2006 was the turning point with serious discussion of the issue and proposals for wholesale “bill and keep” and other approaches that might reduce the high costs resulting from CPP.
China’s 3G licensing delay obscures interesting VAS developments
China watchers were frustrated by the continuing delay in issuing 3G licenses. Best estimates are now for at least one license in early 2007, although if you consider the August 2008 Beijing Olympics as the motivating event, China could delay 3G licenses to near the end of 2007. A more interesting development in China is the dramatic upsurge in mobile value-added services (VAS). Given China Mobile’s relatively low 15% commission for billing, 2005 and 2006 saw more than 12,000 new value-added services launched in China. Some of these were scams, prompting a clamp down by the Ministry of Information Industries (MII), but the net effect has been an explosion of services and a new round of Chinese entrepreneurs, some of which will undoubtedly show up outside of China.
AdvancedTCA finally gets production momentum
After many years of hype, and years of investigation by major equipment providers, we are finally seeing production demand for AdvancedTCA components. Serious volumes are for next year and beyond, but 2006 is the year AdvancedTCA turned the corner, and not just in Japan (a leader in AdvancedTCA adoption) but also in Europe and the U.S.
3G mobile video calling as a substitute for video-over-packet
All deployed 3G UMTS systems support mobile video telephony using the 3G-324M standard, however adoption has been very weak as video telephony is a specialty application. Indeed, it’s been clear for several years that the video application people use is “see what I see” — two-way audio with one-way video. To the extent people use 3G video calling, it’s for “see what I see.”
However, another use of 3G video calling became apparent this year — as video connectivity that is both ubiquitous and more reliable than video over 3G data. With video over 3G packet services, there are wide variations in handset capabilities and large variations in over-the-air data rates. The result is slow, erratic, or non-functional applications. By invoking a 3G video call (frequently from a WAP page or push), an application developer gets guaranteed quality of service and a known handset capability. In 2006 we saw this new approach adopted for such diverse applications as mobile TV and video blogging. Yes, this is an interim use, but it’s likely to be effective until there is widespread deployment of both HSDPA and HSUPA radio technology and IMS quality of service. In the meantime this interim solution is likely to dominate through 2012 or beyond.
Conclusion
This concludes my assortment of interesting, and possibly overlooked, telecom happenings in 2006. Time will tell if these mark really important trends or just minor inflection points.
Brough Turner may be reached using the Comment form below. Also be sure to check out Brough’s blog at blogs.nmss.com/communications.