Plunkett Research Reports the Top 10 Trends within the Telecommunications Industry

Houston, TX. August 4, 2009 –

Plunkett Research reveals 10 of the biggest trends in telecommunications to date. These not only impact the industry as a whole but also dictate where technology is headed in the future. Discover this and more in Plunkett’s Telecommunications Industry Almanac 2010.

"Globally, the telecommunications industry was about a $3.7 trillion sector in 2009, including about $1.2 trillion in total revenues in the U.S.," says Jack Plunkett, CEO and Editor of Plunkett Research. "No other industry touches as many technology-related business sectors as telecommunications, which encompasses not only the traditional areas of local and long-distance telephone service, but also advanced technology-based services including wireless communications, the Internet, fiber-optics and satellites. Telecom is also deeply intertwined with entertainment of all types, including cable TV systems, since cable companies are now aggressively offering local exchange service and high-speed Internet access."

Plunkett’s Top 10 Telecommunications Industry Trends to Watch For:

1. WiMAX Extends Wireless Range Far Beyond Wi-Fi - WiMAX has the capability to deliver extremely fast Internet connections to wireless devices, such as notebooks and mobile VOIP telephones, with each WiMAX antenna having about a 30-mile theoretical maximum broadcast range, but practical ranges will be shorter, particularly for mobile use. WiMAX speeds can reach up to 70 Mbps, but initial industry commercial goals are for 15 Mbps speed for mobile devices and 40 Mbps for fixed devices. Due to its long range, WiMAX has tremendous potential as an alternative to traditional cellular telephone service. For WiMAX to move ahead, technical standards had to be set and adopted. The IEEE 802.16e Mobile WirelessMAN Standard for metropolitan area networks became official in December 2005, opening the door for the deployment of WiMAX networks the world over. Also, the European Commission Decision 2008 set another milestone when it stipulated that 3400 to 3800 MHz frequencies be used for WiMAX in Europe. It requires European Member States to move rapidly to make the spectrum range available for use for fixed, nomadic and mobile electronic communications networks. In addition, the security issues of this long-range system must be met.
2. Apple’s iPhone Sells 40 Million Units, Raises User Expectations - Apple released its second generation iPhone in 2008. The 2.0 unit offered 3G networking that was billed as being twice as fast as the first generation model and offers built-in GPS and iPhone 2.0 software that includes support for Microsoft Exchange ActiveSync and runs hundreds of third-party applications. The company pulled off yet another coup with the release of the iPhone 3G S in June 2009, which sold more than 1 million units in its first three days on the market. For the fiscal quarter ended June 27, 2009, Apple reported 5.2 million iPhones sold, more than seven times what it sold in the same quarter in 2008. The amazing success of the iPhone has spawned a number of copycats such as Palm’s Pre smartphone debuted on June 6, 2009; Nokia’s N97 and T-Mobile’s myTouch 3G which runs on the Android operating system from Google. Watch for fierce competition between the different units, and for other copycats to hit the market in the near term.
3. Dual Mode Handsets Switch from Cellular to Wi-Fi - Major telecom companies are selling handsets that operate as cellular phones when outside and switch to Internet (VOIP) lines once indoors via Wi-Fi. Eventually, such phones may use WiMAX. Britain’s BT plc (www.bt.com) released its BT Fusion service and handset in June 2005. Today BT Fusion offers cellular service at cheaper broadband rates. Initial pricing starts at about $10 per month. In the United States, which typically lags behind other countries when it comes to cellular innovation, the merger of Verizon with MCI followed by the 2006 merger of AT&T and SBC positioned the industry more favorably for combining cellular and VOIP technology. Over the mid-term, this movement, combined with powerful new circuitry and better batteries in handsets, along with enhanced user features and mobile entertainment offerings, will drive the mobile telephone industry to a new era of convergence.
4. Chinese, Indian and African Cellphone Markets Skyrocket - As of late 2008, China was the world’s largest cellular market, with approximately 624 million users (out of a population of about 1.3 billion). China’s subscriber base is expected to double by 2012. India had 347 million users in 2008 (out of a population of 1.1 billion), up from 167 million users as of April 2007, and subscriptions are projected to grow to 500 million by 2010. More than 6 million new cellphone accounts are signed up each month in India, especially in rural markets where landlines are scarce. Likewise, the potential cellphone market in Africa is staggering. In a continent where land-based telephone lines are concentrated in only a few areas, cellular service is the first modern infrastructure many Africans enjoy. By early 2009, Nigeria had 68 million cellular subscribers. Phones marketed to these areas tend to be simple with black and white screens and few capabilities beyond calling, text messaging, FM radio and flashlights and costs are kept extremely low to make the phone affordable.
5. VOIP Use Soars and Threatens To Revolutionize Telecom - For the first time in history, local exchange telephone companies face a dismal market for local landlines. Why? The proliferation of cellular phones is one reason, but an equally big threat to traditional phone lines is the Internet. In particular, the rapid proliferation of high-speed access to the Internet in homes and offices makes Internet-based telephony a logical next step for a wide variety of businesses and consumers. Most newly installed telephone systems in mid-size to large firms are based on VOIP, with virtually all telephone equipment manufacturers now offering VOIP equipment. Likewise, massive numbers of consumers around the globe are adopting VOIP for their basic and/or long-distance services. The fact that phone service can be provided via the Internet enables cable companies to compete head-on with telephone companies, since cable offers Internet service as well as entertainment programming.
6. TV over IP—Telecom Companies Enter the Television Market - TV over IP (IPTV) is slowly becoming a serious threat to cable and satellite TV providers. This is due to several reasons, including a) the cost and difficulty of digital production and distribution are plummeting; b) high-speed broadband access to the Internet in homes is becoming standard; c) the number of homes equipped with media PCs, capable of capturing TV programming from the web and sending it to high-tech monitors for display in the living room, is growing; and d) telecommunications companies like AT&T and Verizon are competing fiercely to take television viewers away from their cable and satellite competitors. Products like the Internet-ready TVs made by Sony, Fujitsu, Panasonic and Sharp, all of which debuted in 2008, will accelerate this trend. Other breakthrough products of note are SanDisk Corp.’s Take TV product that sends videos stored on PCs directly to most TVs and Matrix Systems, Inc.’s plug-and-play box that provides similar service wirelessly. The prospect of IPTV is a boon to telecom companies, since it gives them a highly coveted entertainment service to add to their bundle of offerings.
7. Services Available via Ultra-High-Speed Broadband are Imaginative, Futuristic - As media center PCs proliferate in homes and fiber-to-the-home and other technologies bring ultra-high-speed Internet access within easy reach of millions of households, imaginations are working overtime for digital product developers who want to sell products and services to take advantage of these fast pipelines to the living room. One service that is already underway is increasingly superior video-on-demand; a service which, DVD rental innovator, NetFlix hopes to be the leading firm in the rental of movies via online delivery. As of early 2009, more than 12,000 titles were available from NetFlix for immediate download and viewing on PCs. Ultra-high-speed Internet connections will even revolutionize many types of careers over the long-term. Professionals such as accountants, attorneys, researchers and engineers are finding it much more rewarding to telecommute when they can collaborate with coworkers; make rapid downloads and uploads of high definition drawings and videos and securely store and access critical files in ultra-high-speed and high resolution. Distance learning continues to grow rapidly—already evidenced by the rapid growth of the University of Phoenix. Finally, government and public services are much more accessible from the home or office, without standing in line.
8. 3G Cellular Systems Are Deployed While Ultra Fast 4G is Coming Soon - Today, 3G systems make it possible for wireless subscribers to receive reasonably high-quality music, video and other features, largely for entertainment purposes, and to connect interactively with the Internet. From 2005 through 2009, U.S. cellular service firms planned on investing approximately $15 to $20 billion in system upgrades to make these enhanced activities possible at high speed throughout their most important markets. In India, service provider BSNL set an aggressive target of 100,000 3G subscribers by September 2009, and planned to make 3G service available in 1,000 cities by 2010. As usual, cellphone service providers in major European and Asian markets were miles ahead of U.S. firms in offering 3G early on. For instance, Vodafone (based in England) rolled out mass-market 3G in Europe and Japan in November 2004 after lengthy delays and massive investments. Fourth-generation services (4G) are already being standardized and boosted by 3GPP, a global industry group. However, 4G will be a difficult and complex technology to launch, and both delays and cost overruns could easily occur.
9. BlackBerry Use Soars, but Competition Grows - Easy access to mobile e-mail is considered a vital service by many consumers and business people around the world. That’s why users of the “BlackBerry” device, designed by Research in Motion (RIM), have grown at as much as a 50% yearly rate. The firm added 3.3 million new BlackBerry subscribers in the fiscal quarter ending May 2009, and the total number of BlackBerry users topped 28 million worldwide. Clearly, there is tremendous room for continued growth in the number of subscribers worldwide, so the wild popularity of the BlackBerry is bringing out a raft of aggressive competitors. To begin with, Microsoft invested more than five years of development and enhancement in its Windows Mobile software, which now features mobile e-mail technology. Microsoft’s hook is cheaper pricing, since corporate offices that already have Microsoft Exchange Server 2007 software installed for managing e-mail accounts and Windows Mobile software for cellphones receive the push-e-mail upgrade at no additional cost (these are substantial savings compared to the need to purchase special mobile e-mail servers such as those used by BlackBerry and other devices). In June 2009, RIM was in talks with China Telecom to offer BlackBerry units in China. If talks are successful, sales could begin by the end of 2009.
10. Telecom Equipment Makers Face Intense Competition from Manufacturers in China - The largest telephone service providers in the U.S., Europe, Asia and elsewhere are facing up to the vast changes in telecom technology, investing in hundreds of millions of dollars worth of advanced switching equipment capable of providing ultra-fast Internet service, wireless systems and VOIP service. By the start of the global economic crisis in late 2008, investment was at an all-time high, but was curtailed as sales and profits tumbled. Meanwhile, China-based manufacturers are booming. For example, Huawei Technologies Co., Ltd. posted revenue growth of more than 50% in 2007 to reach $12.8 billion. Despite the global economic recession, Huawei continued to grow its revenues, posting $18.2 billion in 2008, along with excellent profits. In fact, Chinese firms such as Datang Telecom Technology and ZTE Corp. are winning major contracts with telecom service providers around the world, including large sales of VOIP equipment. Not only has telecom equipment used by landline and wireless service providers become a commodity to the extent that price is often a prime consideration for purchasers, but also China has gained respect as a base for the manufacture of technology gear of very high quality.

Additional information is available in "Plunkett’s Telecommunications Industry Almanac 2010," as well as on our web site, www.PlunkettResearch.com.

ISBN: 978-1-59392-149-1

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