By Dr. Judy Reed Smith (judyrsmith@atlantic-acm.com)

Background:

The double-zero decade with two heavy economic downturns, an attack on U.S. soil, two wars and significant consolidation in our industry, has come to a close. As we round out the old decade, we see shifts and new directions. Below are ten trends to keep an eye on for the pre-teen years of this century.

Analysis:

• Wireless Becomes Dominant: According to U.S. Telecom Wired and Wireless Sizing and Share: 2009 to 2014, our latest sizing and share forecasting study, total wireless revenues will eclipse total wireline revenues by 2014. Dynamics driving this trend essentially amount to moving our interactions from desktops, walls or TV stands to our pockets and palms, building demand for wireless data, multimedia content, wireless substitution and wireless-compatible devices (see "Devices as Differentiators" below). Meanwhile, network supply is getting short in patches across the country and carriers face the daunting task of ensuring a strong experience for users without allowing heavy users to diminish the quality for all customers. Providers are testing methods of charging for usage or providing incentives for users to consume less bandwidth.
  
• Devices as Differentiators: As bandwidth and network service features become increasingly commoditized, devices become service purchase drivers. For many buyers, access to devices has pulled ahead of network quality and availability when choosing wireless providers. The iPhone was the first device to demonstrate this dynamic and the industry game now is how to surpass the ground-breaking Apple device. In 2010 there will be more new devices, with even Google shifting its strategy to try out its own device in the race.
  
• Network Services Inspire More Network Usage: Cloud computing, YouTube, social media, HULU, FanCast, telepresence, GPS services, medical file management, shared video from ipods, phones and whatever, as well as behavior changing items which need little network such as Tweeting and Texting, are moving increasing dimensions of communications, problem solving, information access and entertainment to industry networks. As more of our lives are spent in the cloud, per-capita transmissions will skyrocket.
  
• Consumers Demand Ubiquitous High Speed Access: Demand for ever-faster connections -- particularly at the consumer level -- will continue to drive WiFi growth and Internet access substitution of high speeds for lower speeds. Fiber-to-the-home (FTTH) plays are at the heart of the home demand dynamic with (in later years ) stimulus-funded networks extending services to more rural parts of the country.
  
• Wireline Voice Increases its Decline: The ongoing shrinkage of wireline voice revenues—both consumer and business-- has hastened its pace with the economic slide, increased broadband and wireless device saturation. Wireless substitution (see "Wireless Becomes Dominant" above) is central to this trend, particularly with consumers, as is VoIP substitution, particularly with cable penetration. How much decline? 10 percent per year, compounded, according to U.S. Telecom Wired and Wireless Sizing and Share: 2009 to 2014.
  
• Prepaid Wireless Growth will Outpace Postpaid Wireless Growth: Driven by a combination of inexpensive data plans and a weakened economy, prepaid wireless growth will outpace postpaid growth in the near term, and perhaps into the midterm.
  
• Fiber-to-the-Tower Investments: Retail demand drives wholesale demand, and the migration toward wireless services is no exception. Fiber-to-the-Tower (FTTT) solutions represent significant opportunity for wholesalers, and we expect continued investments in this area by traditional carriers as well as cable players newer to wholesale services.
  
• Price Pressure Will Continue for IP Products: It is difficult to imagine price competition for IP-based products being more intense than in the past two years, but we expect the pressure to continue. Although we expect demand for these solutions, as well as overall IP spending, to increase, buyers anticipate even better price points for these products in 2010.
  
• Ethernet Emerges as Mainstream Wholesale Product: Demand data from our wholesale report card surveys indicate that Ethernet-based wholesale demand is migrating from the sampling phase to the demand phase among wholesale purchasers. Satisfaction with Ethernet products is on the rise while price satisfaction for the product is down (a dynamic we are witnessing across the wholesale spectrum -- increases in product satisfaction offset by decreases in price satisfaction).
  
• Wholesale Portfolios Diversify: Finally, our research has shown that dramatic increases in wholesale product satisfaction occurred in 2009 as carriers delivered broader portfolios of wholesale products. We expect this trend to continue in 2010 as carriers roll out new backhaul (and other) solutions.

The Bottom Line:

Many of these trends are interrelated in this challenging and exciting time for our industry. The stuff of yesterday's science fiction is upon us, and the dizzying array of interconnected people, services, devices and applications emerging before our very eyes is rewriting our entire economic landscape. Our industry networks are the backbone of this new world. These networks are facing unprecedented demand and, along with it, new management and technological pressures. How all these dynamics play out remains to be seen, but for telecom executives that survived the turn of the last decade industry fallout, as well as the current economic issues, a timeless truism has come full circle: It's good to be needed.