I'd like to introduce the first guest analyst to the EKTAN, Mr. Martyn Roetter, Ph.D. I met Martyn through his writing on the Gerson Lehrman Group web site and have become a big fan of his writing and analysis on the wireless industry and technology issues in general. Martyn approaches issues from a detailed and many times historical perspective, which I appreciate. He has staked out what I would characterize as a reasoned, but skeptical position regarding WiMAX. With Martyn's permission, I am republishing a recent article that he wrote on the private GLG web site. A brief bio for Martyn is at the end of the article.
Related Links:
Vodafone's 'Long Term' Hesitance
Summary
Vodafone's series of statements over time about LTE are unsurprising. They illustrate normal and ongoing jockeying for negotiating position between and among operators and equipment vendors, continuing uncertainties about the demand for broadband wireless data capacity, and significant differences between market dynamics, installed networks, and competitive environments across the world, including among the various properties of Vodafone itself.
Analysis:
North AmericaThe question for each operator of which next generation mobile
broadband wireless technology to deploy - and in which markets and when - will
be an outcome affected by a combination of perceptions of market demand, the
actions of competitors, the status and usage of its existing networks, the
availability and details of the offerings from vendors (network equipment and
mobile devices), the regulatory environment, its spectrum holdings, and of
course its financial situation.
Vodafone itself owns properties in markets with very different economic,
regulatory, and competitive situations. As a 3GPP operator it can follow an
upgrade path to HSPA+ which may in some markets delay the need for it to move
to LTE or any other 4G network technology, which necessarily involves a major
technological change, beyond the time when this shift becomes imperative in
other markets, or for competitors whose existing technology path may run out of
steam earlier. It should be noted that these decisions on timing depend as much
if not more on (as they should) the behavior and activities of customers and
services providers, and hence how rapidly capacity demands grow, as they do
upon the hopes and persuasive power of vendors to sell new technologies. It is
ironic that perhaps the first major deployments of LTE may occur among CDMA2000
(e.g. Verizon Wireless, Telus, and Bell Mobility in North America)
rather than among 3GPP (the GSM camp) operators if the former conclude that the
CDMA2000 upgrade path will come to a commercial dead end before HSPA does.
Allocations and assignments of spectrum will also be important for operators' ability to introduce new network technologies. On the WiMax front there is some movement to give mobile WiMax a chance to establish itself as a viable technology stream prior to the anticipated emergence of LTE. For example Ofcom in the U.K. is trying to give mobile WiMax a chance to become established against existing GSM competitors by auctioning 2.6 GHz frequencies for mobile use later this year in the context of a technology-neutral policy.
India is another country in which the 2.5 GHz band may provide opportunities for mobile WiMax to prove its worth in significant deployments, if for example the WiMax initiative of the state-owned BSNL is fruitful in exploiting this spectrum before other spectrum for 3G services is made available. It is nevertheless unfortunate that WiMax advocates continue to present misleading statements about the significance of the availability of today’s WiMax systems as a time-to-market advantage over the later but considerably more powerful LTE, ignoring the question of when standards for WiMax systems that can match the performance targets of LTE will be finalized. In contrast current WiMax systems are not different in performance in most cases (and may be somewhat superior or inferior in others) to already widely deployed alternative technologies. Investors assessing the relative commercial prospects for competing wireless technology ecosystems do need to keep the laws of physics in mind as well as business and financial considerations.
Martyn Roetter, is a Principal at MFRConsulting, an independent consultant in the Telecom, Information, Media, Electronics (TIME) sector, and a specialist in global business strategy. Previously he was Vice President at Arthur D. Little, in charge of its North American TIME practice, and Vice President at Decision Resources, Inc., managing consulting and advisory publications services for TIME industries. He also worked at PA Consulting in the UK and US. He has over 25 years of experience in advising on business strategy and technology-related issues for vendors, service providers, financial investors, and regulators and public policy makers. He has worked on projects in the Americas, Europe, the Middle East, and Asia. He served as Chairman of the Compensation Committee of the Board of Allen Telecom until its acquisition by Andrew Corp. Current foci include Broadband wireless and New Generation Networks, Web 2.0 techniques, mobile terminals, regulation, and industry restructuring.
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This Article Copyright 2008 by Martyn Roetter
Some Rights Reserved by Creative Commons License
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THOUGHTS AND COMMENTS, 4/28/08
The last newsletter was published on March 28, 2008. This issue contains four articles, one of which has been reprinted at seekingalpha.com. My author biography and an index of articles is at: http://seekingalpha.com/author/ed-ketchoyian. These are practically identical to the articles here at the EKTAN, but at Seeking Alpha, there have been some very interesting comments. In the last month, my article on Dan Hesse was included in Wikinvest.
Although I didn't go to CTIA, I've spoken to a number of colleagues who did. The impression I get from my limited and biased sample is that the show this year was high on professional networking opportunities, but that the wireless industry is lacking a focus on the next big thing. Notwithstanding the buzz on the ongoing WiMAX vs. LTE religious war, if you are an old school wireless pro from years past, you'd be looking for major announcements that involved spectrum, major infrastructure equipment deals that resulted in commitments of billions of dollars for new or upgraded technology, a blockbuster partnership deal deal, or maybe even an iPhone-type device announcement (iPhone derivatives, such as an iPhone "killer" don't count). None of which happened, leaving some of the colleagues questioning their own future in the industry.
Sprint Nextel continues to look for partners to share the cost of the WiMAX rollout, which will undoubtedly cost several billion dollars, but still has no takers. Given the credit markets being what they are and, for intents and purposes, a recession in place, major deals that might have been possible six months ago, seem like longer shots now. The prospect of Sprint spinning off WiMAX completely to Clearwire or iDEN or being taken over outright, given the intrinsic value of Sprint's spectrum holdings alone, may not happen now in the short term, due to macroeconomic conditions. This situation may end up being a blessing in disguise for CEO Dan Hesse and any Sprint Nextel partisans who wish for the company to remain independent; new management gets some breathing room to turn around the company. Short of transplanting headquarters from Kansas to a location where leadership actually has to care about employee satisfaction because there is a market alternative for good talent (rather than knowing that the best alternative is working for H&R Block, Hallmark Cards, Applebees, McDonald's or back to the farm, which has fostered a culture based on fear for one's job security and having the right political connections over self-initiative), or a wholesale change of entrenched management, it's hard to envision a near term solution to the Sprint malaise with the current lineup. I continue to be a fan of Dan Hesse and believe he is capable, but turning around Sprint is more than a one or two person job. If Dan Hesse is successful in turning around Sprint Nextel, then he deserves to be enshrined with Lou Gerstner and Lee Iacocca in the annals of against-the-odds business turnarounds.
As for the rest of the industry, the big impacts for the future should be, if I'm a vendor, equipment awards from winners of 700 MHz spectrum. However, since the rollout requirements the 700 MHz spectrum are so liberal, i.e., stretched out over several years starting next year when the television broadcasters cease using the spectrum, any major equipment awards and deployments are still well over a year out and will be stretched for three to four years after that. Compared to motivated initial deployments of other networks and technologies in wireless industry past that took between eighteen months to three years from the time of spectrum being awarded, I'd be concerned to be a wireless equipment vendor to U.S. carriers from a revenue perspective for the next few years.
So, where's the money? Will there ever again be a need for the same level of wireless technical field installation nomads, living on the road for almost a year at a time, doing construction work to build greenfield wireless networks when establishing coverage in newly won spectrum was like staking settling land on a new frontier, or will these people be recorded in history in a documentary style that recalls the men who built landmarks like the Golden Gate Bridge, i.e., who existed in a bygone era in the day when making $5 a day was considered good pay? Being in the field building wireless networks wasn't glamorous work and I wasn't one of them, but I know a lot of people who nevertheless reminisce fondly on those times.
There's a lot of buzz out there on mobile social networking, location services, mobile video, next generation bandwidth, quadruple plays, ATC, mobile search, mobile advertising, open networks / Android, wireless internet, etc. These options are so far, for the most part, unrealized promises or "futures". Whatever the "it" ends up being, I believe it will be something unique to wireless, rather than an adaptation or migration of an existing service or capability from another medium. "It" will also be something that has unique utility to consumers that will primarily be useful to them when in a mobile state and has limited value if it is substituted by a fixed version. "It" will also be something that marketers will be anticipate, but that which consumers will decide where the value resides. My vote for "it" according to this criteria is for navigation and location services.
My stated goal is to publish one article a week. It turns out that I'm achieving that goal, but on an asymmetric basis, i.e., a burst of four or so articles every three or four weeks. I'll work on my level loading going forward. I also intend on republishing some guest articles from analysts I believe product unique, quality and non-widely available analysis. I'm continuing to mull on the following topics for future articles, besides the popular Sprint Nextel Watch series: LTE deployment issues, 700 MHz post-auction analysis, Motorola, and a suggested topic called Near Field Communications.
You may have to check the sonicblues.typepad.com every now and then or subscribe to the RSS feed to get fresher material.
Posted by Ed on April 28, 2008 at 05:41 PM in EKTAN Feedback and On the Web, Location Based Services, Sprint Nextel Watch, Thoughts and Comments, Web/Tech, Wireless Industry | Permalink | Comments (0) | TrackBack (0)
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