Scenarios for the Evolution of the Wireless Industry

SUMMARY

Product Overview

There is great uncertainty in the wireless industry over the demand for future mobile services (heightened by slow take-up of early 3G services) and the extent to which alternative technologies will supplement or displace existing cellular standards to satisfy that demand. Cellular (e.g. EDGE, WCDMA, HSDPA, CDMA2000), W-LAN (e.g. 802.11b, a and g), broadband wireless access (e.g. 802.16 WiMAX, 802.20) and proprietary (e.g. Flarion, iBurst, Vivato) systems are all vying for significant roles in the wireless industry. Given the level of uncertainty, single-line forecasting of the future of the wireless industry runs a risk of seriously underplaying the potential impact of many emerging trends.

Building on our analysis in The Role and Impact of Emerging Wireless Technologies, with input from leading industry experts and extensive global case studies, this report presents a number of feasible scenarios for the evolution of the wireless industry, which have profound implications for network operators, equipment and handset vendors and many others. Each scenario is quantified in terms of service revenues and usage (split by service type), network infrastructure revenues (split by technology type) and handset revenues. The report identifies the clear winners and losers in each scenario and the strategies that are needed to secure success.

Scenarios for the Evolution of the Wireless Industry answers your key questions:

• Given the current uncertainties in the wireless industry, what scenarios for the future are plausible?
• How will each scenario affect wireless service revenues?
• How will each scenario affect wireless infrastructure and terminal equipment sales?
• What could be the impact on 3G cellular infrastructure sales of emerging wireless technologies such as 802.16 WiMAX, 802.20, 802.11, Navini, Vivato and others?
• Who will be the technology winners and losers?
• What major new service opportunities are enabled by the evolution of wireless technologies? What actions must network operators take?
• What impact could emerging wireless technology have on the split of revenues and usage between mobile, fixed and other network operators?
• What are the early warning signs of each scenario happening?
• How can organisations continue to take technology decisions given the current uncertainty in the industry?

Who should read this report?

• Mobile operators: to understand the implications for your business from a set of quantified, plausible scenarios. Identify the opportunities and threats ahead and implications for ARPU. Assess the pros and cons of investment in 3G cellular and alternative technologies. Understand how to plan for uncertain service demand and drive the industry to your advantage. Should large and small players take different routes?
• Other operators and service providers (e.g. fixed operators, wireless ISPs): to quantify the opportunities for your business from emerging wireless technologies, and identify the steps you need to take now.
• Equipment and handset vendors: to quantify the impact on your business of possible future changes in technology adoption by your customers. What are the opportunities for emerging or 'second tier' players to gain market share? Identify critical actions you need to take to drive adoption of your solutions. Understand how to protect yourself against scenarios which favour alternative technologies.
• Investors and analysts: to understand the impact on service revenues and infrastructure investment of potential future scenarios. Identify the organisations which are likely to be winners and losers in the future scenarios. See early examples of possible future trends and understand key indicators of the direction in which the industry is moving.

TABLE OF CONTENTS

0 Summary

1 Major uncertainties obscure the future of the wireless industry

• Historically the wireless industry has been technology driven, with mixed results.
• Uncertain demand for new mobile services now makes investment in the right technology critically important.
• 3G cellular has suffered delays and doubts.
• A myriad of emerging wireless technologies, surrounded by hype and confusion, now offer a range of alternative evolution paths.
• Single-line forecasts of the future are now very dangerous.

2 Diverse scenarios for the future of the wireless industry are now possible

• Scenario planning tailored to current industry uncertainties is essential.
• A combination of qualitative and quantitative assessment provides critical insight.
• A revenue-per-megabyte metric helps to classify service opportunities.
• Expert views used to evaluate scenarios.
• Four distinct scenarios show major opportunities and threats.

3 Scenario 1: Premium-priced cellular services continue to rule the roost!

• Mobile messaging and small-screen browsing grow strongly, maintaining a huge gulf between mobile and fixed capabilities.
• Global case studies show early examples of premium data services: I-mode, Vodafone live!, SMS text messaging.
• Key indicators/early signs that this scenario will occur.
• Evaluation shows opportunities for cellular operators and terminal vendors but major revenue implications for wireless infrastructure manufacturers.
• Alternative wireless technologies battle for niche services.

4 Scenario 2: Voice and messaging go cellular ? In a big way!

• Cellular operators sacrifice revenue per megabyte to encourage fixed?mobile substitution and take substantial fixed voice traffic.
• US case studies show early examples of heavy cellular voice usage stimulating ARPUs.
• Key indicators/early signs that this scenario will occur.
• Evaluation shows opportunities for mobile operators and infrastructure vendors but fixed operators must beware.

5 Scenario 3: Fixed voice and Internet go cellular

• Cellular operators capture substantial voice and broadband fixed traffic.
• Early examples show the possibilities.
• Key indicators/early signs that this scenario will occur.
• Evaluation shows a dream come true for cellular infrastructure vendors, but operators struggle with pricing and service usage to protect revenue per megabyte.

6 Scenario 4: Emerging broadband wireless technology takes the market for broadband Internet access

• Alternative wireless technologies deliver broadband access in preference to cellular and fixed.
• Trials demonstrate the potential of emerging broadband wireless access.
• Key indicators/early signs that this scenario will occur.
• Evaluation indicates a major shock for cellular infrastructure providers as operators adopt alternative technology.

7 Making Decisions and Taking Actions in the Midst of Uncertainty

• Organisations must be prepared for diverse alternative futures.
• It is imperative for players to be pro-active in driving the industry in the most favourable direction.
• Opportunities and threats abound for operators and vendors.

Actions

For each scenario, the report provides:

• quantified service mix
• implications for service revenues and usage
• implications for network infrastructure spend
• infrastructure forecasts split by technology type
• implications for terminal sales.

It also includes summaries of key metrics for each industry player type: network operators, infrastructure vendors and terminal vendors.