EMERGING TECHNOLOGIES: Future Shifts

Greece, Fourth century BC: "Man is a social animal," said
Aristotle. Since the early days of civilization, verbal communication has been
the most gratifying social need to all. "The faculty of speech is man's
greatest asset," Aristotle would have gladly added.

USA, 1876: Alexander Graham Bell made the first telephone call to his
assistant Thomas Watson.

Since then, communication has never been the same again (do ignore the
cliché there). First, the barrier of distance was breached-enter
telecommunication. Next, freedom from fixed access was achieved-welcome to the
world of mobility.

So what's happening in round three?

Well,
most visibly, a rapid growth in subscriber bases, and smoothening of networks.

Less noticeable, yet more important, is the rev-up of newer technologies like
VoIP, or the newfound potential of, say, microwave.

These newer technologies may complement, supplement, perhaps even challenge
an existing paradigm.

Three Aces so far

Only three communications technologies have been truly revolutionary-the
telephone, the wireless, and the Internet. They cut across all geographical,
political, and cultural boundaries when it comes to impact, adoption, and
change.

Combinations of these three are also interesting to watch. The telephone—wireless
combo, aka the mobile

phone, has been immensely successful and is mature in its own right now. The
wireless-Internet combo-variants of which are LMDS, MMDS, Wi-Fi, and the
upcoming WiMax-is in its early stages of adoption and holds immense potential.

Talking of the potential, the key lies in doing a good knit-job of any two or
all three of the ace technologies.

In the mobile telephony space, Motorola, Nokia, Ericsson, Texas Instruments,
Qualcomm, Analog Devices, Verizon Wireless, Vodafone, Hutchison, etc. have been
some of the biggest success stories. Radio trunking, GSM, CDMA, and PHS are the
key enabling technologies here, while mobile phones and PDAs are the primary
access devices.

The non-mobile wireless Internet space is shaping up fast now, with the
sudden success of Wi-Fi becoming a ready catalyst. Here, most of the push has
come from Intel, and laptops are the default access devices.

The greatest potential, however, is promised by a magic combination of all
the three ace technologies. It is that very combo that GPRS, EDGE, EVDO, etc.
strive to achieve and of which 3G is the most touted elixir.

At the same time, the slow uptake of 3G services worldwide and bleeding
bottomlines of service providers throw more than a hint that 3G need not be the
manna that was hoped for. The wait could get longer....

Over to Convergence

The first level of convergence-of the phone and the wireless-happened
through mobile devices (and not through PCs, which get more credit as the first
Internet access devices). That-and the subsequent high growth of mobile phone
shipments over PCs-led many in the industry to believe that the next level of
convergence would also hover around a mobile phone-like device. Hence the 3G
roadmap....

Alas, as the grand chase progressed, haze blinded the vision...the story of
hype and the plateau is well known to all.

Thankfully, the industry's belief in convergence survived, and emerged
stronger as well.

Along the way, also surfaced the realization for a corresponding convergence
of devices, as the various industry camps-led by Nokia, Intel, Cisco, et al-quietly
agreed on the ambiguity surrounding the ultimate convergence device.

That didn't mean they went quiet. Each camp has been trying hard to enrich
and expand its respective ecosystem in the hope of making it the primary vehicle
for convergence.

3G: Inch-by-inch

In the mobile services segment, where most of the growth is concentrated at
the moment, mainly two technology families-W-CDMA and CDMA2000-have locked
horns.

The incumbent technology, GSM, is approaching 1.5 billion subscribers
globally while the challenger, CDMA, has mopped up more than 225 million
subscribers so far.

The fight, as we know, is to dominate the 3G era.

GSM service providers had suffered an initial setback after the launch of
CDMA services in India and elsewhere, but could leverage their incumbent status
to stage recovery, and growth.

The biggest disadvantage for GSM operators is that there is a relatively
longer migration path to 3G. Moreover, they also need to invest in additional
license as they move to GPRS, EDGE and then to W-CDMA. On the other hand, the
migration from CDMA2000 to EVDO and then to EVDV doesn't require additional
spectrum and is relatively faster and smoother.

According to the CDMA Development Group, there are around 90 commercial CDMA
networks worldwide. Major CDMA operators include Verizon Wireless, SK Telecom,
KDDI, Sprint PCS, KT Freetel, China Unicom, Reliance Infocomm, and Tata
Teleservices.

Quite a number of GSM operators are already offering 3G, with an estimated
subscriber base of around five million. Subscriber base of EVDO services is also
understood to be in a similar range.

W-CDMA-Will GSM Take the Bus?

NTT Docomo, which launched the W-CDMA service commercially in October 2001,
has been the only truly successful 3G operator so far. It accounts for more than
50 percent of the W-CDMA subscriber base worldwide. 3 (Hutchison), the next
biggest W-CDMA brand, has managed to get around 1.8 million subscribers from its
close to 10 operations across the three continents of Europe, Australia, and
Asia.

In India, GSM operators Idea Cellular, Bharti, and Hutchison have so far
launched GPRS and EDGE only. While Idea was the first to launch EDGE in its
Delhi circle, Hutchison announced a pan-India rollout. Bharti has already
launched EDGE in at least five cities and has plans to complete a pan-India
rollout in the coming two months.

While all operators have claimed download speeds of up to 200 kbps on
EDGE-enabled handsets, the actual throughput is in the range of 100 kbps.
Nevertheless, that's higher than the throughput achieved on the existing CDMA
networks in India as also on the dial-up networks (Reliance Infocomm had
initially claimed data speeds of up to 144 kbps).

As far as W-CDMA is concerned, it will either happen by the end of 2005 or
may not happen significantly in India. The reason is that CDMA operators will
most likely launch EVDO services in the next six months and that will put
pressure on GSM operators to upgrade. But given the extraordinarily high costs
of W-CDMA deployments and the price-sensitiveness of the Indian market, GSM
operators may opt for cheaper, faster alternatives. It's quite possible that
they will consider leapfrogging to 4G-like services. And they will better do
that before their CDMA competitors usurp the mobile broadband market share. In
fact, Bharti is already reportedly working with Intel on broadband wireless
technologies like WiMax and Wi-Fi.

EVDO and EVDV-Putting the Ball Back in GSM Court?

On the CDMA side, Verizon Wireless, SK Telecom, KDDI, and KT Freetel, and
several others have already launched their EVDO services. As of January 2004,
over four million subscribers worldwide were estimated to be using an EVDO
network.

In India, Reliance Infocomm is understood to be testing EVDO in select areas
of Delhi and Mumbai. The other CDMA major, Tata Teleservices is also said to be
conducting test runs in Andhra Pradesh. Commercial rollouts are expected within
six months. However, the rollout of EDGE services by GSM operators may prompt
both Reliance and Tata to accelerate their rollout plans.

EVDO has the capacity to carry data at speeds up to 2.4 Mbps and even the
throughput is in the range of 2 Mbps. This is many times more than the speed
offered by EDGE, and will help CDMA players once again establish their
technological superiority.

However, as discussed above, GSM players are not likely to accept that as a
statement of fate. They will respond with an appropriate tech weapon, be it W-CDMA
or WiMax or both.

Moreover, CDMA operators will need to address issues other than technology,
if they were to grow market share and subscriber base.

Some of those issues, as one has seen in the recent past, relate to
positioning, marketing, interconnect, billing, customer care, et al. Coverage is
another major issue. Put together, these factors increase the comfort level of
subscribers and thus lower the resistance barrier for services.

Access Is Happening

Of the three components of the network-the transport, the access, and the
premise-it's the access that's increasingly hogging the limelight.

The access network-typically the last-mile-has perhaps been the biggest
deterrent to telecom growth in developing countries like India, where high-yield
customers are scarce. For an estimated 80 percent of landline customers, it
takes years to even recover the cost of providing access to him.

For mobile service providers, the cost of last mile is relatively cheaper,
and that's one big factor contributing to the phenomenal cellular growth.
However, that also depends on how long is the 'last mile', apart from
factors like geography and demography.

Forget laying the cables, putting up cell sites in difficult terrains and
sparsely populated areas becomes an unviable proposition for operators.

That's one reason why rural tele-density remains so low in India.

Given the background, it's only natural that service providers are turning
to their equipment providers for answers.

As discussed above, WiMax could be a potential answer.

The technology works in the 2 GHz to 11 GHz spectrum and is
non-line-of-sight. The promised bandwidth-up to 75 Mbps-is very high by 3G
standards and lives up to 4G requirements. The range-up to 30 miles-makes it
highly promising for the access network. In other words, the last mile stretches
up to 30 miles...what more could service providers be wanting?

Moreover, WiMax can be a last-mile technology for all telcos-be they
wireline or mobile, GSM or CDMA. Its high operating frequency allows the antenna
to be quite small in diameter so that it can unobtrusively be mounted on
rooftops, rather than on dedicated towers.

VoIP Is Sizzling...

Enterprise-class VoIP and voice over Net (VoN) are already happening and if
it were not for the regulations they would have surely grown at unprecedented
rates, and matured considerably more.

The Internet has been the prime enabler and catalyst for these technologies.
Already, telcos worldover transport voice over IP networks, especially over the
long haul.

Peer-to-peer voice over the public Internet is the hottest tech in the VoIP
world today. Skype, OnInstant, and EuroPass Telecom are some of the leading
companies in the space.

Skype was created by Niklas Zennstrom and Janus Friis of Kaaza fame, and has
received investment from several venture capital firms.

This September, Skype launched SkypeOut, a pre-paid service that allows
people to call any telephone number in the world from anywhere in the world
using the Skype software. Earlier, in July 2004, Skype had signed agreements
with Colt, iBasis, Level 3, and Teleglobe to provide call termination services
worldwide. Skype has already served more than 23.7 million downloads and over
1.5 billion minutes of voice traffic over the Internet.

The biggest reason behind the success of Skype is that it's peer-to-peer.
That's a big difference from other Internet-based voice services-Yahoo!,
MSN, NetMeeting, etc.-which route voice through a central infrastructure for,
maybe thousands of concurrent conversations. Skype requires a one-time
authentication for a given session, after which the connection is peer-to-peer
and the central infrastructure is bypassed-just what Kaaza did.

The service costs around 2 cents per minute in regions like the US and
Europe, though it can be much higher in developing countries.

Thankfully, for traditional telecom service providers (including the cellcos),
a Skype-like service is far from being a substitute for regular telephony
services. The simple reason is that a telecom subscriber cannot contact a Skype
user; only the vice versa is possible.

That said, telcos are certainly not overlooking the threat.

In fact, the more daring among them are taking the VoIP plunge themselves.
British Telecom for one has launched its BT Communicator service in the UK, in
tie up with Yahoo!.

BT Communicator is an integrated software package (with Yahoo! Messenger),
available for free download over the Internet. It gives over 19 million BT
customers the option to switch among messaging, telephony, and other
communication services. (That's quite neat a convergence.)

More importantly, when abroad, BT customers can plug their laptop into the
Internet and make an international call to any UK number for the price of a
domestic UK call. The cost will be billed to their BT phone bills back home.

AT&T is offering its residential VoIP service called CallVantage in the
US to users who have a cable modem or a DSL pipe coming into their homes.

AT&T provides an adapter that can be used from almost any location where
there is a telephone and a broadband connection. This allows customers to use
CallVantage even while traveling.

The service comes for $20 a month and provides unlimited local and
long-distance domestic (US) calling, which is extended to Canada.

These
telcos are quicker to see that regulation can at best be a temporary barrier
that can't stop the stream of technology for long. Technology can always get
smarter and reach out to a receptive audience in sophisticated ways.

Moreover, VoIP seems to have caught the fancy of not just millions of
Internet users but also some powerful tech organizations.

The Voice on the Net (VON) coalition, which includes AT&T, Intel, MCI,
Microsoft, and Skype among others, has been lobbying with the US authorities for
not applying traditional telephone regulations to VoIP, on the consumer interest
plank.

Is VoW Dressed to Kill?

VoIP over wireless (VOW) is the next logical step after voice over wireless,
voice over Internet/IP and Internet/IP over wireless. It also completes the
convergence of the three aces-the telephone, the wireless, and the Internet.

The VoW technologies with most visible potential are Wi-Fi and WiMax. While
Wi-Fi is primarily a premise network technology (see box), WiMax is designed for
the access network.

To begin with, service providers are exploring the 802.16a standard, which
was approved by IEEE in January 2003. The standard provides support for
non-line-of-sight service deployments and works in the spectrum range of 2 GHz
to 11 GHz.

Already, service providers, including AT&T, British Telecom, France
Telecom, and Reliance Infocomm are doing test runs for WiMax (see VOICE&DATA's
August issue). Of late, Bharti is also understood to be testing some form of
broadband wireless access technology, either 802.16a or 802.16e.

WiMax Forum, the non-profit association that promotes the adoption of IEEE
802.16 compliant equipment by operators, says it will start certifying products
in 2005. As of date, the forum already had 140 members, which included equipment
vendors, and service providers, among others. Some pull!

Premises Tech

Be it an enterprise or a home, the connectivity landscape is changing at a
rapid pace. There are plenty of access devices to choose from-the PSTN phone,
the cellphone, the VoIP phone, the softphone, the upcoming VoWiFi phone...the
list goes on.

Does that mean that users will be switching from one device to another as
they move across a premise, in and out of the premise, or from one premise to
another?

Possibly yes, for a few transiting years, after which the appetite for
convergence will demand devices to become increasingly multi-modal.

Software will become a big enabler, and will get more and more embedded on
the devices. This, together with a resident operations support system (OSS)
software module, will help users to seamlessly switch from one network to other,
without the need to re-authenticate again and again. Also, companies like Pronto
that specialize in hotspot OSS will have a more important role to play.

The end communications software will integrate applications for voice,
messaging, e-mail, gaming, video-conferencing, among others in one suite.

Thus, with the onus for seamless connectivity going to the end-user devices,
multiple networks will continue to coexist. The networks will complement,
supplement and overlay others.

Yet, the wireless won't completely replace the LAN cabling, for certain
good reasons. Most importantly, the power-on-the-Ethernet technology will give
copper a fresh lease of life.

The technology works by injecting DC-converted power over the spare pairs of
Cat 5 and above cables. Various LAN equipment and user devices including laptops
and VoIP phones can then be plugged into the cable to draw DC power.

Power-on-the-Ethernet, as one can see, converges not just telephony and
Internet, but also power on a single medium, copper.

This will also address the problem of an IP call getting disconnected in the
event of a power failure. Also, with 10G over copper already a reality and with
higher speeds in the pipeline, copper cabling is giving fiber a run for the
money in the premise.

The Outlook

In the next ten years, Internet companies will gradually become powerful and
take some sheen off the pure-play telcos. To counter competition from new
technologies, big telcos will acquire some of smaller Internet companies. Expect
lots of collaborations, and co-optitions too.

Companies like BT and AT&T, which already have a roadmap for newer
technologies in place, will be able to absorb technological changes better. (BT
has taken the approach of having a futurologist.) Also, being an integrated
telecom player can be an advantage.

It's in the best interest of telcos to have a roadmap for integrating new
technologies with their existing offerings, so that the nimbler, sophisticated
Internet players don't take them by surprise.

Closing eyes from the reality doesn't change it....

Multi-communication is the emerging reality.

Increasingly, people are using multiple modes of communication in quick
succession. Now the e-mail, the next minute instant messaging, and then a voice
call-switching among communication media is really that fast. New workplaces,
and youth are driving such trends.

In the coming years, technologies that support these trends will be in demand
and therefore companies that embrace these technologies will attract more
subscribers.

Routing voice traffic over the network has been telcos' mainstay business.
So it's in their-and their subscribers'-interest to support all kinds of
voice traffic, regardless of the medium.

The key to their future success lies in recognizing the undercurrent of
change, and responding to them-the faster the better.

Deepak Kumar

India's Communications Roadmap

2004: GSM Has Got EDGE

EDGE will be available in all GSM circles by end of 2004, on Bharti,
Hutchison, and Idea networks. This will enable data speeds of up to 200 kbps,
more than the existing data speeds offered by CDMA and dial-up networks

2005: CDMA Will Get 3G

Most likely, both Reliance Infocomm and Tata Teleservices will be heralding
3G services in India by launching EVDO in select circles. This will again give
CDMA operators a big edge over GSM operators in terms of data speed, at 2 Mbps

2005-06: Now-or-never for W-CDMA

Pressure will mount on GSM players to offer 3G data speeds and they will
invest in W-CDMA rollouts if cheaper alternatives are not available

2006-07: WiMax Will Take Roots

Low cost of investment, ease-of-deployment, and quick RoI will encourage
service providers to adopt these technologies and roll them out on a pan-India
basis, even in rural and remote areas. Licensing issues will get resolved
without much hullabaloo, as both policy makers and service providers will see
the benefits

200x: VoIP and VoN Will Be Free

Almost all telcos will lobby against freeing up the technologies (not
without reason, of course). At the same time, they will also work towards
putting a VoIP model in place, knowing fully well that the march of a powerful
technology can only be delayed, never frustrated. The technologies will be fully
freed, within five years from now

2007: Power-over-the-Ethernet Will Take off

This will put to rest the talk about the days of premise cabling getting
over. In fact, it will be used to power several of the WLAN equipment, laptops,
VoIP phones, et al. 10G, and more, over copper will give premise fiber a run for
the money