2008 will be a critical year for WiMAX
A worsening global economic environment and pressure on business and consumer finance will have a negative effect on the mobile market in 2008. In the short term, this implies that the market will, at best, experience a slow start. This new reality, in which the heady days of market growth are over, is a depressing outlook for mobile network operators (MNOs).
In their maturing businesses, they will need to focus on increasing their revenue and reducing their cost and investment profiles. Analysys Research anticipates that a number of mobile players will take a critical look at their major capital and discretionary spend. Retrenchment and restructuring may well follow, and there could be a number of casualties. Below, we outline our views on the evolution of three key areas for MNOs over the course of 2008.
Olympics and European Football Championship will boost mobile TV
These two major sporting events will serve as catalysts for adoption in the fledgling mobile TV market. In China, France and Germany, service roll-outs are scheduled to coincide with the games. Establishment of a mobile TV standard will have positive effects on take-up of the service and the official endorsement of DVB-H as Europe's mobile TV standard is a step forward, although spectrum availability remains limited. The future of mobile TV will rest on the introduction of devices, such as the SlingPlayer, allowing users to stream video from the home TV over the Internet to supported devices, including PCs and mobile phones. Mobile TV will grow in popularity this year.
Flat-rate data pricing will stimulate usage
Interest continues to grow in mobile data services. The major impediments to increasing levels of take-up and usage are the pricing models chosen by MNOs, because tariffs remain at prohibitively high levels. From the MNO’s perspective, the per-megabyte charge for data is predominantly determined by the network technology deployed. As MNOs move to more advanced technologies, they have the opportunity to offer increasingly attractive pricing models. A marked trend will emerge towards a flat-rate charging model, with higher data caps than at present for the majority of service packages, making browsing increasingly accessible. Limited bandwidth has traditionally deterred users from uploading content to the Internet via their mobile phones, but wider roll-out of HSPA will begin to change this. The medium-term demand for mobile data is evident, but is unlikely to materialise as a significant growth factor for operator revenue during 2008.
WiMAX will come under the spotlight, as MNOs consider alternatives
2008 will be a critical year for WiMAX. The technology suffered a major blow in the USA in 2007, when the partnership between Sprint (one of its biggest advocates) and Clearwire fell apart late in the year, but, globally, it enjoyed a number of small-scale commercial launches in developing markets. Long-term evolution (LTE) appears better suited to developed mobile markets, but its success depends on whether it can achieve targets for network performance at the right price and within the right timescales. Besides the WiMAX debate, MNOs will need to consider their broader 3G network strategy. The availability of low-cost fixed broadband, deployment of indoor base stations (femtocells) and adoption of dedicated broadcasting networks could challenge conventional views of network enhancement. An approach combining femtocells and broadcasting networks with HSDPA+ may well meet the capacity needs of a wide range of operators and, if this opinion prevails, 2008 may become a time for MNOs to seriously reconsider their thinking on technology evolution.