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EnvironmEntal drivErs of communications trends

Predictions Join us for 2011 for...

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MAY 23-26, 2011 | THE CONVENTION CENTER DUBLIN, IRELAND

Industry heavy-hitters to speak at Management World 2011

Join them and other key players as they unwrap the who, what and how of communications enabling digital life. Speakers include:

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Olivier Baujard, CTO, Deutsche Telekom David Gurle, GM & VP Skype Enterprise, Skype Erik Hoving, CEO, NetCo Member of the Board, KPN International

Steffen Roehn, CIO, Deutsche Telekom Kevin Peters, CMO, AT&T Rajeev Suri, CEO, NSN

Ben Verwaayen, CEO, Alcatel-Lucent Stephen Shurrock, CEO, O2 Ireland

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Predictions for 2011 Environmental drivers of communications trends

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Report author: Rob Rich Managing Director tM Forum Insights Research rrich@tmforum.org Publications Managing Editor: Annie turner aturner@tmforum.org Creative Director: David Andrews dandrews@tmforum.org Commercial Sales Consultant: Mark Bradbury mbradbury@tmforum.org Publisher: Katy gambino kgambino@tmforum.org Client Services: Caroline taylor ctaylor@tmforum.org Marketing: Corporate Marketing Director Lacey Caldwell senko lsenko@tmforum.org Report Design: the Page Design Consultancy Ltd Head of Research and Publications: Rebecca henderson rhenderson@tmforum.org Advisors: Keith Willetts, Chairman and Chief Executive Officer, tM Forum Martin Creaner, President and Chief Operating Officer, tM Forum nik Willetts, senior Vice President of Communications Published by: tM Forum 240 headquarters Plaza East tower, 10th Floor Morristown, nJ 07960-6628 UsA www.tmforum.org Phone: +1 973-944-5100 Fax: +1 973-944-5110

Page 4 Executive summary Page 6 Prediction 1 the margin crunch intensifies Page 7 Prediction 2 Cloud services approach the mainstream Page 9 Prediction 3 Data management and analytics become critical competencies Page 10 Prediction 4 Machine to machine accelerates Page 11 Prediction 5 smart utilities grow Page 12 Prediction 6 Mobile advertising moves center stage Page 13 Prediction 7 the bandwidth crunch continues Page 14 Prediction 8 Mobile payments make progress Page 15 Prediction 9 social media prove an opportunity and a threat Page 16 Prediction 10 security issues become more serious

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teleManagement Forum 2011. the entire contents of this publication are protected by copyright. All rights reserved. no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, tM Forum. the views and opinions expressed by independent authors and contributors in this publication are provided in the writers personal capacities and are their sole responsibility. their publication does not imply that they represent the views or opinions of tM Forum and must neither be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. the reproduction of advertisements and sponsored features in this publication does not in any way imply endorsement by tM Forum or of products or services referred to therein. While every effort has been made to ensure that articles, sponsored features, logos, and trademarks appear correctly, tM Forum cannot accept responsibility for any loss or damage caused directly or indirectly by the contents of this publication.

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Predictions for 2011

Executive summary
A fundamental in understanding growth for communications services is the state of the global economy, as overall telecom financial performance is related to economic growth. According to the Organisation for Economic Cooperation and Development (OECD) the global economy will expand 4.2 percent in 2011. the good news is that the recovery started in 2010 continues, though at a slower rate. however, concerns about the sustainability of sovereign debt levels and growing trade imbalances around the world pose risks to this recovery. China and India are expected to lead the larger economies in growth, with China growing in the 9 percent range, and India around 8 percent. Developed economies are not expected to fare nearly as well, with the U.s. expected to achieve a rate of 2.2 percent, Japan a rate of 2 percent and the European Union slightly less than 2 percent. Other important trends include: Strong growth in Africa: this decade is expected to see massive development in Africa, evolving from Western aid to Eastern trade-based economic models. Energy remains a key source of growth. It continues to play a key role, with the continuing upward trend in oil and natural gas prices. Countries with large reserves will continue rapid growth. The impact of policy-based stimulus programs slows to a crawl: Many of the stimulus programs initiated in response to the global recession have run their course and are unlikely to be repeated, if only because most governments no longer have the funds to provide additional support. Inflation remains low to moderate. While demand for commodities (especially food and energy) increases, prices hold relatively steady.
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Fast growth countries like China take steps to curb national inflation. Against these global trends, here are our top 10 predictions for 2011 we live in interesting times. Prediction 1: The margin crunch intensifies Fixed line revenues, including for data, are under pressure and the rapid growth of mobile broadband hasnt brought additional revenues, but requires massive investment in network capacity. Arguably communications service providers (CsPs) greatest opportunity is in acting as enabler for other parties in the value chain. In the short term, there is no quick fix. Prediction 2: Cloud services approach the mainstream theres lots of activity in this area with different companies investing in data centers, computing infrastructure, software platforms, and much more. not all of them will succeed and we expect to see rationalization during 2011. We predict the sweet spots will be small and medium-sized businesses, emerging markets, and software as a service. In addition, lots of enterprises will be forced towards the adoption of cloud by financial considerations. Prediction 3: Data management and analytics become critical competencies Communications is one of the worlds most data intensive businesses, yet the timely and effective use of this data is lagging way behind that of many other industries. this needs to be addressed. Data management and analytics can improve the customer experience, thereby increasing revenue, enhancing the brand, reducing churn, and extending the CsPs role across the value chain, particularly when the information is available in real-time or near real-time. CsPs need to start by figuring out where the biggest payback will be, and go from there.
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Competency in data management and analytics is essential for CsPs continued growth

Prediction 4: Machine-to-machine accelerates After a slowdown in 2010, we predict rapid growth this year, particularly in automotive, asset management, energy management, home and business security, and telehealth. Prediction 5: Smart utilities grow the combination of demand, rising energy costs and stimulus funds are pushing this sector along, with most of this years growth coming from smart meters and experimentation with dynamic pricing. Demand response technologies and distribution automation will play increasingly big roles. there is resistance among customers to smart metering including a class action suit in California education will be all-important. smart grids also have a role to play in securing electricity supplies in the face of cyber attacks. Prediction 6: Mobile advertising moves to the mainstream Propelled by the rise of smartphones, apps and mobile broadband, and mobile advertisings effectiveness, this will be the year it goes mainstream. great attention needs to be paid to privacy and consumers concerns to avoid irritating them and provoking regulators into action. nevertheless, this is a huge opportunity for operators. Prediction 7: The bandwidth crunch continues network operators are struggling to keep up with demand for capacity, to the extent that customer dissatisfaction with their services is having a negative effect on some brands. given the rise in video traffic and the continuing proliferation of smartphones, the situation is likely to worsen in 2011. the uneven economic recovery is making it difficult for service providers to raise revenues and the specter of net neutrality is an additional brake on investment. Even so, massive investments in infrastructure are underway around the
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world, but they will not do much to ease the bandwidth crunch in 2011. Prediction 8: Mobile payments make progress Although many think of mobile payments in terms of developing economies where few people have bank accounts or credit cards, they are swiftly moving up the agenda in developed economies. Lots of different parties are keen to make an impact, from technology firms to network operators, credit card companies, device makers, and start-ups. In november 2010, Verizon Wireless, At&t, and t-Mobile UsA set up a mobile commerce venture to address this market and keep the card companies out. Many, many other initiatives are underway, with google, Apple, and others hovering. Prediction 9: Social media prove an opportunity and a threat In 2010, web users spent more of their time on social media blogs, wikis, social networking, social gaming, and so on than anything else, and it is accounting for a larger share of their online activity as time passes. While this is a great way for service providers to capture lots of data about how their brand is perceived and what users are thinking, if ignored or mismanaged social media are potentially very damaging. Yet few CsPs are using analytics to monitor and exploit social media, as they do for other channels. Most are missing huge opportunities; a few will emerge as leaders at the end of 2011. Prediction 10: Security issues become more serious the growth in the number and type of devices is presenting plenty of opportunity for cyber criminals of all types. As the number rises dramatically due to more affordable devices coming onto the market, the problem will only get worse. Arguably, this will be surpassed by the expected explosion in machine-to-machine communications, which will also be targeted.
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Predictions for 2011

Prediction 1

the margin crunch intensifies

Fueled by stagnation of core services, increased competition, and the struggle to cope with increasing capacity demand, communications service providers (CsPs) will see an intensification of the margin crunch in 2011. the margin crunch is not new for 2011, but a continuation of a set of issues that began several years ago and have been exacerbated by the global financial crisis. stagnation of traditional services is a phenomenon that began with the developed world, but is increasingly experienced in developing economies as wireless penetration increases. In a nutshell, demand and revenues for fixed services have shrunk as wireless substitution has grown, and many subscribers have chosen to cut the cord. In addition, competition from alternative providers, such as emerging VoIP providers, has further eroded wireline voice revenues. Fixed data service revenues have provided some relief, but have not made up for the loss of voice income. similarly, wireless data revenues have provided some additional revenues, but all you can eat pricing plans have limited revenue growth. high levels of innovation by over-the-top (Ott) services companies mean data services are often perceived as commodity-level services. Rapidly increasing Ott digital video content, more sophisticated consumer and corporate applications, and the widespread adoption of smartphones in developed countries, have compounded the problem, and massively increased demand for network capacity. this has led to significant capital and operational expense increases, but resulted in little or no new revenue. Exacerbating the situation further is the slow and uneven economic recovery, making it difficult for service providers to raise revenues. If anything, this trend is likely to intensify in 2011, given the increase in pricing pressure brought on by high penetration rates, increases in bandwidth-intensive applications like webdelivered video, and an even faster ramp in smartphone introduction. CsPs will need to continue network investment to handle the increasing demand, but are unlikely to see commensurate increases in revenues. some relief will be realized by service providers who replace their all you can eat pricing plans with tiered pricing plans, but it remains to be seen how much churn this will generate, as not all CsPs have chosen to pursue this path, at least for now. A variant of this may be more flexible policybased pricing plans, which may be perceived as more responsive to customers needs, but CsPs must be careful to retain a desirable degree of simplicity in implementing these plans, or risk alienating some of their customers. to further reduce churn, a number of CsPs will focus more on improving customer experience, aiming to improve customer perception of their service and interaction across the various touch points of the customer lifecycle. While there is plenty of opportunity for improvement here, CsPs will be challenged by the bandwidth crunch (see prediction 7) to improve the quality of service that they deliver. As the global financial crisis eases a bit, CsPs are also looking hard to find new sources of revenue, and will likely gravitate to more of a role as innovation enabler to other players in the value chain, offering capabilities such as access and transport, customer information, location services, flexible charging, and customer care, sometimes in a wholesale fashion, and other times in a twosided business model arrangement. Other opportunities, as detailed in predictions 2, 4, 5, 6 and 8, offer growth opportunities to agile CsPs who can deliver differentiated solutions, but there is little instant relief to be found in them. In conclusion, while these efforts promise to grow revenues over time, the problems will not be quickly or easily addressed, and the margin crunch will likely remain through 2011.

CSPs are also looking hard to find any new sources of revenue, and will likely gravitate to more of a role of innovation enabler to other players in the value chain...
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Enterprises will be forced towards cloud services by their financial organizations

Prediction 2

Cloud services approach the mainstream

this year will be an important year for cloud services and service providers, with all the volatility typical of a large-scale emerging market. All manner of companies especially collocation hosting, and managed service providers have made significant investments in building cloud computing offerings, constructing data centers, acquiring computing infrastructure, implementing software platforms, and marketing and selling cloud services. this is occurring on a global, regional, and local basis, at varying scale. But not all of these companies are realizing adequate revenue to support their investments. We expect to see some rationalization of the market in 2011. some companies will likely exit the business, others will partner to gain channels to market, new services to offer, or just scale, and others will be acquirers, either of companies or their assets. From a user adoption point of view, the sweet spots will be:
n from a sizing perspective, small and medium-

sized businesses (sMBs) n from a geographic perspective, the developing countries n from a service perspective, software as a service (saas) small and medium-sized business is a sweet spot for three reasons: current degree of automation, economics, and It organization size/ skill base. While a handful of industry segments invest heavily in It, most sMBs are not highly automated, and are unable to attract, retain, or even afford highly skilled It organizations. In addition, most are loathe to invest capital in non-core assets, and when they do invest in It, most sMBs tend to favor low-cost alternatives. All of these characteristics favor adoption of cloud services, which do not require large capital investments or a deep It skill base, and can
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make smaller companies look much larger than they really are to customers and partners. Developing countries are strong candidates for cloud services, simply because most local companies (the majority of which happen to be sMBs) have relatively low levels of automation. therefore, there are no systems or investments to abandon. Also, in some developing countries, competition for It resources is ferocious, and capital is not always readily available. In a sense, the path to cloud computing in developing countries is not dissimilar to their telephony experience; many of these countries leapfrogged fixed services, moving directly to wireless/mobile services. With proper availability of cloud services, we could see a similar but different game of leapfrog in the sMB space. saas will be the service segment of choice for 2011 because of its availability, simplicity, and variety. saas is clearly the easiest way for a company to get started with public cloud services, and the variety of applications available will make it much more attractive to automationstarved companies. While saas will appeal most to sMBs, it will also begin to penetrate large corporations, mostly in non-core application areas, as enterprises look to get their feet wet in cloud. Our focus on sMBs as the fastest-moving cloud adopters does not mean there will be no significant activity for enterprises. In fact, enterprises will likely be forced toward cloud services by their financial organizations. the global financial crisis has given new power to the CFO, who has in turn sought two things from all departments (including It): lower costs and greater transparency. A lack of either is viewed as unacceptable. As CFOs see more transparency and apparent lower rates from cloud providers, they will push harder for adoption. Enterprise It organizations are likely to take three simultaneous approaches here.
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Predictions for 2011

1. Continue the gradual migration to cloud. Most are already implementing virtualization. While they cant do this for all their apps, they are going through an evaluation and selection process for apps to be migrated. this will not happen quickly; as enterprises remain concerned about security, performance, and portability, among other things, lack of plan and progress is a dangerous position for an enterprise CIO. 2. Push their managed services vendors toward cloud. Many enterprises have already outsourced some of their It-related tasks. these companies will push their managed services suppliers toward cloud delivery paradigms, expecting lower cost and greater transparency. In addition, cloud delivery requirements will begin to crop up in managed services requests for proposals. In fact, many of the early private clouds in the enterprise space will likely be externally managed private clouds. 3. Explore cloud-based non-critical apps. Many enterprises will go this route, whether the It organization wants to or not. Forward thinking

CIOs will explore this area to gain experience and perhaps establish and test governance procedures. In fact, this could be even considered a defensive approach; enterprise It organizations with large application backlogs who do not adopt this approach may find their business colleagues going around them, directly to the saas providers. Its also worth mentioning that some enterprise applications currently viewed as easily moving to cloud may not be so simple after all. For example, many view saas-based collaboration tools as an area of great potential, but enterprise It must ensure that these tools integrate with internal systems, business processes, and governance procedures. the bottom line here is that, despite the CFO push, enterprise transition to cloud will be a longer, slower process. Finally, we expect to see some transition of consumers to cloud, especially as smartphone use continues to explode and delivery paradigms evolve, but we do not expect revenues to rise at the rate they will in the sMB segment.

Its also worth mentioning that some enterprise applications currently viewed as easily moving to cloud may not be so simple after all. For example, many view SaaSbased collaboration tools as an area of great potential, but enterprise IT must ensure that these tools integrate with internal systems, business processes, and governance procedures.
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deploying analytics is challenging, it is also essential for future profitability

Prediction 3

data management and analytics become critical competencies

Communications has always been among the most data-intensive industries in the world. the sheer volume of calls, minutes, sessions, packets, customers, network elements, chargeable events, customer contacts, inventories, and locations, among other things, is mind-boggling. Add to that the way that service providers have grown, through diverse lines of business, geographic expansion, mergers and acquisitions, purposebuilt networks, and stove piped operations, and its easy to see how data management has become such an issue for the industry today. Yet this data, and the timely and effective use of it, is critical not only to more efficient operations and lower costs, but also for improving customer satisfaction and retention; as well as driving product and service innovation, and extending the CsPs value across the digital value chain. In other words, proper management and analysis of the data, increasingly on a real-time basis, is critical to continued growth and profitability. Analytics, or processes and applications that use data to support actionable insight for a functional process in a specific context, represent an increasingly important area of focus for CsPs. Analytics operate in a vast domain, with myriad data sources, processes, contexts, forms of insight, and recipients. In fact, analytics can be deployed across virtually every aspect of the enterprise and even extended out across the broader value chain. the key, of course, is to determine where the greatest potential payback lies for the CsP and the achievability of that payback. For CsPs, analytics can be applied to help assess and manage the product and service portfolio, marketing and sales, service performance and quality, customer support, billing, charging and cost management, and brand performance. some popular examples of analytics include customer segmentation modeling and analysis, predictive analytics for product adoption trends, product profitability, price plan effectiveness, cross-sell/upsell recommendations, campaign performance, customer retention, real-time service performance reporting, next best action/realtime offer management, process optimization, brand value modeling and monitoring, network asset performance, partner performance, and fraud management. While there are clearly challenges to deployment of analytics, at this time of great change, a well-constructed approach to analytics deployment will be fundamental to continued growth and profitability, and therefore will be a critical competency.

For CSPs, analytics can be applied to help assess and manage the product and service portfolio, marketing and sales, service performance and quality, customer support, billing, charging and cost management, and brand performance.
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Predictions for 2011

Prediction 4

machine to machine accelerates

Despite a bit of a slowdown in 2010, we expect machine-to-machine (M2M) implementations to accelerate in 2011. We believe the primary application areas will be automotive, asset management, energy management, home and business security, and later in the year, telehealth applications. A number of CsPs have already established dedicated M2M practices, or are active in the space as part of an emerging applications or new initiatives group. Many of these companies have already opened or announced innovation centers, and have dedicated hundreds of engineers to support new application deployment. next steps include expansion of partnerships and streamlining of certification processes. Ford is a leading example of automotive M2M. Fords focus is on enabling the driver to do more, safely. It is improving voice recognition and smartphone compatibility in its sYnC platform to leverage mobile apps and increase network speeds. A major focus is safety; Ford already knows that customers use apps while driving, and intends to use voice recognition to reduce distractions, keeping drivers eyes on the road and hands on the steering wheel. Ford is also working to make its software development kit and application programming interface more attractive to the developer community, seeking to enable more safely accessible apps. Asset management is a cross-industry application that, among other things, tracks locations of mobile assets. Other apps include measuring utilization and health of assets. Energy management spreads across power generation, transmission, and distribution, including load management and demand response. Among the most promising areas is smart metering for commercial, industrial, and residential sites, though it is clear that much more consumer education needs to be done to accelerate residential deployment, given recent class action suits. Other emerging applications are distribution automation and remote electrical vehicle charging station management. Emerging telehealth applications include remote monitoring for home-based dialysis, cardiac monitoring, and electroencephalographic monitoring for epilepsy patients. While much of existing M2M uses 2g networks, the rollout of WiFi, long-term evolution, and related small cell sites will be beneficial to M2M as volume and the need for guaranteed performance grows. Also important will be new networking technologies like Dash7 and ZigBee. Finally, as M2M devices increase, the pressure to roll out IPv6 will grow, as it will be necessary to provide address space for all the new devices.

A number of CSPs have already established dedicated M2M practices, or are active in the space as part of an emerging applications or new initiatives group. Many of these companies have already opened or announced innovation centers.
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distribution automation will be key to achieving a good return on smart grid

Prediction 5

smart utilities grow

Demand growth, rising energy costs, stimulus funds, and increasing consumer education will drive much of smart grids growth in 2011. Most of this growth will come from the deployment of smart meters, and related experimentation in dynamic pricing, demand response, in-home networks, and grid monitoring. Certainly smart meter initiatives around the world in recent years have proven the concept. they are cost-effective and maximize energy efficiency, leading many governments to mandate advanced metering. today a small fraction of meters are smart, but the segment is expected to grow between 15 percent and 20 percent annually. three leading examples of experimentation are smart City in the netherlands; and in the U.s., Austin texas Pecan street Project, and Boulder, Colorados smartgridcity. Most observers feel that over time, smaller and medium-sized cities will be more nimble and deploy faster than larger cities Demand response and distribution automation are two particularly important concepts for energy providers. Demand response (DR) technologies allow utilities to communicate with smart devices things like load control devices, smart thermostats, and home energy consoles inside the customers premises. this interaction is essential for helping customers to reduce or shift their power use during peak demand periods. DR solutions play a key role in several areas: pricing, emergency response, grid reliability, infrastructure planning and design, operations, and deferral. Distribution and substation automation improves reliability with real-time monitoring and intelligent control. Many commentators feel that, while it will not be as visible as smart metering, distribution automation will be the key to achieving an acceptable return on smart grid deployment. there are still a number of barriers to overcome in realization of the smart grid. some residential customers have resisted smart metering, spurred on by fears of higher costs and health concerns, and resulting in at least one case (in Bakersfield, California) of a class action lawsuit. Its clear that much more consumer education is required to accelerate residential deployment. Another significant concern, especially for distribution automation, is grid security. In response to growing concerns about the current electric grids vulnerability to cyber attack, theres a push on several fronts to develop better security solutions for the smart grid. today, many utilities link grid monitoring and control systems to open networks such as the Internet. Critics have vocalized strong concerns that the utilities are not doing enough to reduce vulnerabilities. Of course, many of the issues in managing the grid parallel those of managing large communications networks. security is discussed on page 16, but equally important are data management issues and, of course, communications network ubiquity, reliability, performance, and affordability.

Of course, many of the issues in managing the grid parallel those of managing large communications networks. Security has already been discussed, but equally important are data management issues and, of course, communications network ubiquity, reliability, performance, and affordability.
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Predictions for 2011

Prediction 6

mobile advertising moves center stage

Mobile advertising will rise significantly in 2011, due to a variety of factors, including the rapid rise of smartphones and the availability of broadband networks, providing a rich and powerful platform for personalized advertising. But perhaps the most important reason for growth in mobile advertising is its effectiveness. According to a number of research studies, mobile advertising click through and conversion rates are much higher than those of email or web ads. new approaches gaining favor in 2011 will make this an even more compelling space. Ultimately, relevance is perhaps the most important factor in the effectiveness of advertising and mobile broadband. When combined with location, demographical, and behavioral information, it can deliver a rich, media-based, personalized offer, markedly improving conversion rates. For example, knowing a consumers taste in products while they are in a retail area might result in some recommendations for products to purchase and combine discounts or promotional pricing information on those products. similar approaches could be made for restaurants, cinema, or a variety of other retail products or services. Location-based mobile ads and services will be particularly important and the ability to influence consumer behavior and create real-time demand will be aided by near realtime delivery of personalized offers to specific individuals at a particular site at a particular time. Offers can be distributed through social media, creating a viral marketing effect. social media will continue to be a focus area for gathering more information about consumers. Advertisers will use opt-in programs with various rewards and loyalty programs to gain additional information about consumers to leverage through the mobile channel. this strategy will receive lots of play in low average revenue per user emerging markets. Advertisers will also use techniques like mobile accessible viral video to promote their brands through social networks. Finally, advertising will increasingly be embedded in free or subsidized apps and tailored more to the look and feel of the individual app. All of this activity will not come without resistance, however; consumer awareness and concern over privacy, and consumer reaction to increased mobile spam will drive industry bodies and regulators to be more vigilant in their activities against offenders, and focus will increase on personal information privacy and security. Mobile operators have a major opportunity to participate in the mobile advertising value chain, given their reach, subscriber information, and array of consumer services, channels, and touch points. they can also augment this position through participation in mobile payments arrangements to facilitate conversion. Operators will need to increase their focus on partnerships, creative business models, and real-time data management to exploit this opportunity, but the opportunity is certainly there.

Mobile operators have a significant opportunity to participate in the mobile advertising value chain, given their reach, subscriber information, and array of consumer services, channels, and touch points.
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Wireless services providers are marching ahead with investment in infrastructure

Prediction 7

the bandwidth crunch continues

network operators are struggling ever harder to cope with the demand for greater network capacity. In developed economies, this is driven by the proliferation of video content, more sophisticated consumer and corporate applications and the widespread adoption of smartphones. Many are experiencing performanceimpacting congestion, especially at peak traffic hours, and some are experiencing significant customer dissatisfaction and negative impact to their brand. If anything, this trend is likely to increase in 2011, given the rise of web-delivered video, and an even faster ramp in smartphone introduction. not only are smartphones becoming more powerful and the variety of apps expanding, but technological advances, open source business models, and increased competition are putting serious pressure on pricing. this will drive not only greater penetration in developed countries, but greater affordability in developing geographies. Most observers peg smartphone shipments at something fewer than 300 million units in 2010. some of them expect shipments to increase to as many as 500 million units in 2011. Exacerbating the situation are two additional factors: the slow and uneven economic recovery is making it difficult for service providers to raise revenues; and the specter of net neutrality-related regulation. these issues make it much more difficult for service providers to confidently invest in new infrastructure. this does not mean that service providers are standing still in their network investment; indeed, many wireless service providers are marching ahead with deployment of 3g access technology, or upgrading existing technology with hsPA deployments, more microcells, and Ethernet backhaul. Fixed networks are also being upgraded with more fiber backbones and copper and fiber access facilities. there are more than 100 trials and a number of deployments of 4g (LtE and WiMAX) across the globe, and a large number of production deployments ongoing and planned for 2011. In addition, small cell sites and WiFi offload are being aggressively deployed. some service providers are looking for new approaches and processes to more effectively plan, design, deploy, and manage capacity. service providers are searching for compromises with regulators that will allow them to invest knowing they will receive a fair return on their capital, but progress will be slow. the bottom line here is that relief from the bandwidth crunch will not be realized in 2011.

Service providers are searching for compromises with regulators that will allow them to invest knowing they will receive a fair return on their capital, but progress will be slow.
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Predictions for 2011

Prediction 8

mobile payments make progress

Mobile payments, which started in the countries where credit card penetration is low, will take a large step forward in 2011, thanks to interest from major financial and technology players, increases in near field communications (nFC) capabilities, and geographic expansion of existing systems. three of north Americas largest wireless carriers Verizon Wireless, At&t, and t-Mobile UsA agreed in november 2010 to create Isis, a new mobile commerce network they plan to deliver within 18 months, in partnership with financial services firm Discover Financial services. Banking giants Visa, Bank of America, JPMorgan Chase, and Wells Fargo are also testing technologies that would transform a smartphone into a wallet. In Europe, many initiatives are being announced, among them Orange and t-Mobile UK with BarclayCard, Visa with telefnica in spain, Plus in Poland, and several players in turkey. google appears to be building a location/ search-driven payment and advertising service that would let users purchase goods using nFC, and has announced that its new Android 2.3 release will support nFC. not to be outdone, Apple is said to be looking at nFC for its next gen iPhone and iPad products, and appears to be planning to launch a payment service in 2011. nokia has already begun a mobile payments system with Obopay, and has announced that all of its smartphones launched in 2011 will have an nFC component supporting the single Wire Protocol (sWP) and MicrosD security. PayPal has also joined the fray with a partnership with Blingnation for a mobile wallet. Finally, expect to see virtual currencies like Facebook Credits and super Rewards enter the mobile fray. Of course, a number of things need to happen before mobile payment hits the
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mainstream. the capability needs to be embedded in lots of mobile phones though that is happening through the inclusion of nFC secure elements, controllers and miniature antennas on microsD cards. Merchants will need to install nFC chip readers at their cash registers not an inexpensive proposition, but one that could make them more attractive to early adopters. Finally, consumers will need to actually use the technology. Expect to see some early partnerships between service providers, technology companies, and retailers resulting in some attractive offers to drive the adoption.

Three of North Americas largest wireless carriers Verizon Wireless, AT&T, and T-Mobile USA agreed in November 2010 to create Isis, a new mobile commerce network they plan to deliver within 18 months.
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CsPs must understand the breadth and significance of social media

Prediction 9

social media prove an opportunity and a threat

social media will be increasingly relevant in the lives of consumers and businesses alike in 2011. Blogs, wikis, bookmarks, feeds, video sharing, social gaming, and social networking will, if anything, become more important in the home, the workplace, and with the expansion of mobile broadband, everywhere else as well. Web users in 2010 spent more of their time on social media sites than anywhere else, and that share of online time is likely to increase even more in 2011. this combined with the megaphone effect achieved by influential social media users, makes social media increasingly important sources of data for service providers looking to capture the thoughts, preferences, and opinions of customers. In fact, every aspect of customer experience, including product and service portfolio, sales and marketing, service delivery, billing and charging, customer support, and brand management has a social dimension. It also makes social media an extremely large potential liability if they are ignored or mismanaged, and for many CsPs a potential situational double-edged sword. Many CsPs have become aware, sometimes painfully, of the power of social media as both a potential brand enhancer and brand destroyer. Many have adopted a cognizant but reactive approach to social media, conducting labor-intensive monitoring of selected social networks, blogs, and micro blogs and reacting in varying timeframes to selected content. Few have taken the same analytical approach with data received from older channels (such as call center voice, email, or chat logs). Even fewer have positioned the data they have received from these sources as just one more source to be integrated with the customer information they receive from other channels and viewed holistically. Finally, very
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few have exploited social media through an outbound marketing and brand enhancement channel. In summary, CsPs have made progress, but are missing huge opportunities that industries like retail and consumer electronics are leveraging. A number of analytical tools and capabilities have emerged recently to support CsPs use of social media, including text and data mining, natural language processing, model management, and data visualization. In addition, facilities to monitor applications like microblogging (twitter), social networks (Facebook), and video sharing (Youtube) are becoming increasingly popular. these tools are only effective when supporting a well thought out social media strategy. In order to leverage social media data, CsPs must understand the breadth and significance of social media. they must understand the legal and regulatory implications. they must set goals for social media programs, and ultimately tie their social media metrics to their corporate metrics to be successful. A handful of CsPs will emerge in 2011 as industry leaders in social media strategy, integrating social media as another data source into their business processes, and learning lessons from other industries in exploiting this relatively new, but powerful, data source.

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Predictions for 2011

Prediction 10

security issues become more serious

security issues will continue to mount in both commercial and consumer areas. Cyber criminals, increasingly skilled at acquiring and taking advantage of individual trust, have found ways to do more with less, inflicting more damage with fewer intrusions. hackers are spreading their wings as well. In response to improved security in Windows 7 they have moved on to other operating systems, applications, software services, and devices such as smartphones, tablets, and intelligent media players. Apple and its products, including iPhones, iPads, and the itunes media service, have all experienced increases in exploits. Importantly, with the coming worldwide explosion of mobile devices and the diversity of operating systems and applications deployed by consumers and enterprises, even more opportunities for intrusions and theft are available. today, many scams target mobile devices, and more widespread incidents are almost certainly on their way. historically, scams have tended to target focused groups of mobile users, such as

TM Forum Security Management Initiative In late 2009, the tM Forum launched an aggressive security Management Initiative to enrich its Frameworks and certification processes with full-spectrum security Management guidance concerning architecture, processes, information, applications, interfaces, and testing. Contributions of intellectual property from the U.s. national security Agency (nsA) and the Defense Information systems Agency (DIsA) prompted a tM Forum Information Framework (sID), enrichment project. this project, completed in October 2010, was an important first step toward incorporating cyber security support into Frameworx, because it delivered a standardsbased way to model information needed to detect, analyze, and act on security vulnerabilities, threats, events, and incidents as they relate to the assets, services, and products provided. As security features are incorporated into the tM Forums Frameworx, service providers and suppliers will be able to certify their conformance to Frameworx security-oriented best practices and standards using Frameworx Conformance Certification Assessment. service providers can then confidently procure standards-based products rich with security management features. today the tM Forums security Management Web Community provides the facility for collaborative discussion and work efforts on important security themed topics such as mobility security, cyber security (sharing of real-time data on attacks), digital policy management, privacy and governance, identity management and auditing for cloud environments, and more. It boasts over 60 member companies, and includes security subject matter experts from all stakeholders government/defense, CsPs, system integrators, equipment vendors, software suppliers and defense contractors. tM Forum members are welcome to join this groundbreaking Initiative and should contact Christy Coffey, head of tM Forums government and Defense Market Center ccoffey@tmforum.org. For more information, please visit www.tmforum.org/security.

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Cloud offers myriad opportunities for intrusion, as cyber crime knows no geographic borders

customers of a specific bank or retail company, but broader threats are emerging around a variety of areas, including government programs. the hugely diverse market for mobile applications also offers new markets for criminals. Already, researchers have discovered some apps in Android Market, the app store for the Android mobile operating system, which have been collecting mobile subscriber information and sending it to questionable addresses. speaking of devices, machine-to-machine (M2M) will offer ample opportunity for cyber criminals, just given the sheer number of devices deployed. these devices could create opportunities for cyber terrorism, illegal monitoring, or disabling of physical security (such as surveillance), facilitating related criminal acts. Applications have also had their problems, among them numerous privacy breaches for new Facebook users, and google weathering a class action suit over its launch of Buzz. More of these breaches are bound to occur in 2011 as social applications usage spreads across the world, and more consumers gain access to broadband, whether fixed or wireless.

Finally, cloud computing offers myriad opportunities for intrusion. While leading cloud infrastructure and application implementations may offer security capabilities that meet or exceed those of the best commercial It implementations, the sheer volume of new players, sites, platforms, networks, and applications implemented before and during 2011, combined with the push to get those implementations to market, will create a huge playing field for cyber criminals. the struggle of governments to work together to combat cyber crime will continue in 2011, but progress is being made. Most governments recognize the need to develop common standards for security solutions, yet they also want to maintain their autonomy over how technology is deployed within their borders. Leading countries with less parochial views are now working with the commercial sector to develop and expand the reach of these common standards, since cyber crime knows no geographic borders. standardization offers the best opportunity for accelerating security product innovation and improving overall security.

The struggle of governments to work together to combat cyber crime will continue in 2011, but progress is being made.
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