Telecoms anti-predictions for 2009 � what won't happen

US market analyst predicts what won’t happen

1 - 2009 won’t be the year of mobile marketing

Combine ad agencies’ negative mindset with today’s economics and you have tough sledding for mobile marketing through 2009. While brands worldwide have been willing to experiment in mobile marketing, the advertising agencies who represent them have been slow to embrace the medium. Agencies complain about a lack of consistent metrics and mass reach. Many advertising professionals fail to see mobile marketing’s greatest value – the ability of marketers to engage with consumers in an ongoing, two-way relationship.

Mobile marketing clearly suffered from the global economic slowdown as early as mid-2008. Budgets and programs in this area will continue to be downsized through the economic doldrums and most likely for 4-6 months beyond a global economic upturn.

But there are some bright spots that may boost mobile marketing in 2009. The rapid adoption of mobile Internet services by consumers, particularly in North America and Europe, is bringing mobile Internet nearly to mass-market levels, giving media buyers numbers they can live with. Also, there appears to be an attitude shift from mobile network operators (MNOs) with regard to “selling” their coveted inventory – subscriber reach and information. This would mean MNOs allowing marketers some subscriber information , which would permit them to personalise marketing programs and leverage the intelligent parts of MNO networks, such as mobile search and location based services.

2 - Mobile operators will not own primary customer relationships in mobile banking

Given the high consumer utility and universal need for personal financial services, mobile financial services present a great opportunity for the world’s MNOs, potentially representing one of the largest sources of data traffic outside of person-to-person messaging and mobile social networking. But in terms of customer ownership, they won’t be the lead dog. MNOs in the developed world are taking a classic enabler role within the mobile banking ecosystem, acting as an aggregator and facilitator of mobile banking services on behalf of banking institutions. Their role is important, but the relationship for financial services remains between the consumer and the banking institution, not the consumer and the MNO. In this way, MNOs avoid taking third-party financial risk, shifting that burden along with marketing costs to their partners. This means MNOs appear to be satisfied with the increased data traffic these mobile banking solutions will drive for them and the stickiness the services create for them.

Banks have taken the lead role in driving mobile banking solutions. It is their nearly wholesale embrace of the concept that has been the most significant development in mobile banking to date. They have the most to gain and they are becoming increasingly motivated. Banks see mobile banking as a way to decrease costs through the automation of transaction processing and account management, and through the decreased amount of human personnel required for customer support.

To this end, Citibank in Asia has credited mobile alert messaging with driving down call volumes to its call centre. Banks also see mobile banking as a way to finally develop banking relationships with the unbanked. Banks see mobile as a bridge to that elusive demographic, hoping to leverage the nearly ubiquitous mobile market to introduce newly tailored banking services such as international remittance.

Cash? Swiping a credit card? So 2008! Contactless payments via the handset, enabled by near field communication (NFC), that’ll be the way to pay in 2009 . . . won’t it?

3 - There will be no big NFC roll-outs in 2009

It seems like we’ve all been waiting a long time for NFC handsets and the multiple applications they can support, but that wait isn’t going to end in 2009. There will be no big NFC rollout in 2009 because there still remain issues and hurdles for the main players as well as the technology to overcome during the next 12 months.

That’s not to say that there won’t be developments, trials, and limited deployments around the world, and it certainly isn’t to say that there is any lack of interest or motivation in bringing NFC to market. It’s just that handset availability, UICC [universal IC Card] with SWP [single wire protocol] availability and the partnerships, applications, and business agreements just won’t be in place within 12 months.

But it won’t mean that NFC or alternative phone payment systems will be on hold for another 12 months: 2009 will help provide the key foundations for deployment in the years that follow. Instead, what 2009 will see is NFC emerging in devices other than handsets – helping to invert the traditional role for NFC, since it was first touted as a handset technology.

Increasingly NFC will be an option for end-users and developers looking to leverage contactless cards and NFC smart tags to add contactless technology to existing PCs and similar computing devices. A USB-attached NFC reader provides the link between contactless cards and actions and the virtual environment. Applications such as device and network access, smart tag programming and service initiation, and others are all possible using these devices in a managed environment. Companies such as Alcatel-Lucent (with tikitag), Sony, ACS, SCM Microsystems, and others are already packaging NFC peripherals for end-users and developers.

In the meantime to capitalise on the gap between NFC handset expectations and their delivery, there will a number of moves to add the sticker form factor to existing contactless card products. The potential is there for the offerings to enable banks to go straight to enabling handset payments without the complexity of the technology or the business partnerships required by NFC, but the offering is also short of many of the applications that are driving real interest in NFC.

What about the short-range technology at the other end of the retail equation: RFID? Should those initials now stand for Recession Foils Intended Deployments?

4 - RFID investments will not stop in 2009

ABI Research does not expect the current global economic to deter RFID investment in 2009. In fact, we view RFID technology as a means to an operational efficiency end, so to speak. Investing in RFID can positively impact the bottom line and address business pain points, especially in tough economic times. For example, consider out-of-stock scenarios in retail. The fight for the consumer dollar is stronger than ever and not having something in stock is more of an issue when consumer spending in general is restricted. RFID becomes more relevant and impactful than ever. Enterprises can invest in new technologies such as RFID that can begin reducing costs immediately and make a company more competitive over the long term. So, while some organisations may cancel or delay pilots, we do not expect this to be a common practice among the majority in 2009.

However e-pedigree in pharmaceuticals using RFID will not make major strides. After much anticipation and promise, the California e-pedigree initiative has shifted timelines again. The deadline was first January 1, 2009, pushed earlier this year to January 1, 2011. And just recently the new date was set to January 1, 2015. While we expect some activity to take place in the pharmaceutical space, the earlier timetables would have pressed more non-lead adopter pharmaceutical manufacturers and distributors to take a much harder look at RFID in 2009.

Finally, although there are a few exceptions, ABI Research believes most Sam's Club suppliers are not preparing to meet the retailer's requirements for affixing RFID tags to sellable units starting in October 2009. Many Sam’s Club suppliers have delayed their compliance efforts, seemingly with little concern over Sam’s Club’s level of seriousness or the potential penalties they could levy. If Sam’s Club does not balk on its mandate, many firms will then have to invest heavily and speedily to meet the requirement, or face fees for non-compliance.

Those of us with a few days off over the holidays – and those newly among the ranks of the underemployed – will be looking for a bit of cheerful and relaxing down-time. What about a time-shifted movie on the box?

5 - Hollywood studios and other content producers will not challenge latest nDVR court ruling

The Second Circuit Court of Appeals’ decision on 4 August 2008 to reverse the district court’s copyright violation ruling in the case of Cablevision vs Twentieth Century Fox (including Disney, Paramount, The Cartoon Network, CNN, TBS and NBC), left the cable industry wondering whether this is the final catalyst for unfettered network-based DVR (nDVR) rollouts.

Prior to this decision, a judge had ruled that by using its remote storage-enabled DVR service, Cablevision (and not just its customers) would be engaging in unauthorised reproduction and transmission of copyrighted content. Observers speculated that due to the prolonged and continuous US court arguments against cable companies’ plans to implement network-based DVR services, content owners would not give up the fight to keep the cable sector from further diluting the perceived value of their content.

ABI Research believes that the deep-pocketed content owners in question will resign themselves to the fact that this battle may be lost, and consumer forces may just be too powerful to justify much more investment in blockading the movement. If the benefits of integrated nDVR, video on demand (VOD), and switched digital video (SDV) touted by the cable industry and its suppliers are real, along with addressable advertising systems that can increase service uptake and stickiness while improving advertising efficiencies, the content ecosystem can’t continue to discount and ignore them.

More and more broadcasters are allowing their content to be time- and place-shifted. Cable VOD systems have been around long enough to see some service evolution, and now there are systems being deployed that have over 100 broadcast channels flowing through VOD premises-based and DVR systems enabling time-shifted and other enhanced TV services.

It is the cable sector’s big bet that time- and place-shifted programming capabilities, targeted digital ad insertion, and ultimately true network-based DVR offerings will all be the baseline capabilities helping to make consumers’ viewing habits and experiences much more flexible and personal. Add web-based capabilities to the pay-TV platform, social TV concepts, and the great HD viewing experience, and cable providers might still have a chance to stave off over-the-top and Internet-centric video services.

Well what about those over-the-top and Internet-centric video services? Have their times finally come?

6 - Will IPTV replace traditional broadcast TV in 2009? No, not quite yet!

Despite the fact that IPTV continues to make great strides in the global pay-TV market, in terms of service rollout and experience the technology remains in relative infancy in many countries. While many operators have achieved six-figure IPTV subscriber figures, there are plenty of others that have not been as successful. Even in countries with large, mature broadband subscriber bases, the success of IPTV is not guaranteed. For instance in the UK, IPTV’s take rate has remained poor despite the significant number of broadband users. This is due to satellite TV’s stranglehold.

By contrast, in Hong Kong PCCW’s Now Broadband TV has been enjoying a prodigious growth rate ever since its launch in September 2004. By the end of July 2008, it had 932,000 subscribers on its 160 channels (of which 85 are exclusive). Other larger companies that have tasted success include France Telecom (more than 1.5 million) and Verizon (approximately 1 million).

Operators wanting to deliver a robust and future-proof service will first have to overcome a multitude of challenges. They will need to take care of content-related complexities such as costs, security, and copyright negotiations, as well as technical complexities such as availability, maturity of technology, middleware, architecture design, and even the choice of equipment. In PCCW’s case, its success came mainly from its ‘a la carte’ subscription model, free STBs, and cheaper rates. However, there is no one-size-fits-all solution for carriers from elsewhere planning to use someone else’s ingredients for success.

IPTV has a considerable impact on the telecommunication and broadcasting industries. It converges the TV-watching and Internet experiences by transforming non-real-time video services into two-way services through real-time transmission of broadcasting content, thus blurring the boundary between the broadcasting and telco arenas. In addition, digitisation brings with it programming variety and enhanced program quality, such as HDTV. Nonetheless, the perception that bandwidth will continue to grow beyond boundaries to deliver unlimited expansion for every broadband household is a myth. The last mile to our homes will not have enough bandwidth to support all that we want to do with our home Internet connections.

Moreover, prospective customers are expected to delay purchasing decisions until they can determine the respective benefits of cable and satellite systems. Consumers will also wait for fibre optic cables to reach their homes. Playing the waiting game seems to be the natural option, given the understanding that prices will only drop further as competition gets more intense.

Even when IPTV becomes widely adopted at a later stage, it is unlikely to replace existing pay-TV services to become “regular TV.” Instead, it will take on a complementary role in the TV-viewing experience and coexist with the range offered by traditional broadcast services.

1.7 Over-the-top video to the TV will not rule the world, but perhaps will take over a nation state or two

Perhaps unsurprisingly to any owner of a home router, the biggest hurdle to getting online video to your TV continues to be the network. Stringing cable or using Wi-Fi to get a YouTube or Netflix streamed video is still a pain for many, and even if you do have an easy-to-use device like a game console, you may find that other things trip you up, such as software firewalls or having to reboot the router. But overall, things have moved at lightning speed in 2008 in giving the consumer the option to get online video in the living room, and we expect more solutions to come forth in 2009.

The most successful living-room web video solutions will be the game consoles, both in 2009 and beyond. Netflix streaming to the Xbox 360 is seeing rapid adoption, and while Microsoft is not releasing numbers, we expect of the 12 million or so Xbox Live users, at least 1 million or so will try the Netflix streaming service in 2009.

And it’s not just Netflix that will gain in popularity. While it’s just early days for startup Boxee, it has already ported Hulu to work on its service, so today those with an Apple TV could stream Hulu’s free ad-supported service to their TV to get access to the libraries of TV content from NBC, Fox and others. While cable providers may try to combat these direct-to-consumer services over the Internet using bandwidth caps, we expect that an equally likely scenario is for them to eventually integrate Hulu and other services into their set-top box platforms.

8 - The living room social will not be about ice cream in 2009

The ‘living room social’ won’t be about ice cream and forced smiles in 2009, but instead will be about the invasion of social networks onto the TV screen. Today’s online console services already represent communities that include millions of online gamers exchanging in-mail, messaging and content, and these are just the first. We don’t expect Twitter updates to become commonplace on the 50in plasma screen in the near (or even distant) future, but we expect that recommendation and content communities will grow over time to reach the TV.

Early efforts by TiVo to send content to friends are just an early sign of this, and we also see efforts by Cisco to integrate social networking with online video in its Entertainment Operating System (EOS) platform serving as an early indicator of where they will go next after their push into over-the-top PC video: the TV. As with mobile communities, the social network will look very different on the TV and on the PC screen, but as we have seen with social communities in general, consumers find most things, even figuring out what content to watch, is more fun with friends.

With fuel prices dropping steeply again – at least for the time being – movement of goods and people will get cheaper in 2009. But will they be more efficient?

9 - Intelligent transportation systems won’t hit the big time

Intelligent transportation systems (ITS) are beginning to get some headlines again, with demonstration and test systems cropping up in a number of US and European cities in 2008. What we expect is to see is some encouraging results that validate the technology and the potential benefits. What is not going to happen is a large-scale implementation in 2009. Even without the economic recession it was unlikely that ITS would be production-ready in 2009, but now, unfortunately, it is a certainty that we will have to wait to start reaping the benefits. We do expect some incremental progress so that when finances improve some effective improvements can be made to traffic management and safety on the roads.

2009 will not be the year where the majority of trailers in the United States are equipped with a telematics tracking device. At around the midpoint of 2008, with fuel prices still rising strongly and before the mortgage credit issue had blown a hole in the global economy, the benefits of a trailer tracking system seemed to be almost unbelievably good, with some ROI calculations showing just a couple of months before an investment was paid for and started a positive contribution to the bottom line. Outlook for the near future showed strong growth and a possibility that in the United States market penetration for trailer-tracking systems could break the 50% barrier within the next year or two.

However the sheer reduction in volume of business has diverted attention away from contemplation of new technology investments at the same time as fuel cost becomes a less pressing issue. In reality, investing in commercial telematics technology is exactly what transportation businesses should be doing in the current economic climate if they want to get ahead and stay ahead. In practice, many companies are fighting to stay in business, and however promising the numbers look, management is cautious about dipping into cash reserves.

Portable devices will not replace fixed in-cab devices as the most popular option for fleet management systems (FMS) in 2009. Despite the recent introduction of some very capable units and the added functionality of remote scanning, the lower cost and greater ruggedness of a fixed device will ensure that the majority of new FMS installations in 2009 will still feature an in-cab-only interface. As the demand for telematics in service and local delivery markets grows we do expect the handheld device to become popular but not ubiquitous.

So much for trucking and tracking, then. What about the rest of us? We may not know whether we’re coming or going, but we’d like to know where we are. What is – or isn’t – in store when it comes to navigation and location technologies and services?

10 - The location industry will not come to a halt

Despite the economic downturn reaching its full impact in 2009, the level of activity and innovation in the location industry will not come to a halt. While venture capital may indeed become scarce, a large number of innovative companies are out there which will continue to launch new features and solutions in areas such as location-based social networking, outdoor GPS, pedestrian navigation, predictive traffic, alternative positioning technologies, mapping, local search, geo-tagging, and GPS chipsets.

In fact, it might prove to be a good thing that fewer new companies will see the light of day, as it will give a better chance to existing start-ups to build out their businesses in a less competitive environment. Nevertheless, further consolidation might take place, with companies looking to reach a scale sufficiently large to achieve profitability. One area which will be severely hit in 2009 is the automotive sector, with consumers shying away from expensive in-dash navigation and consumer telematics offers in favour of cheap handset-based or personal navigation device (PND) solutions.

Despite increasing activity and interest in both on-board and off-board handset-based navigation, they will not displace PNDs as the preferred navigation form factor in 2009. However, connected PND vendors will face a difficult year with consumers less willing to pay recurring monthly fees than ever before due to the economic uncertainty. Despite high expectations and some early initiatives from companies such as Jentro Technologies and Locationet, location-based advertising will not become a significant source of revenues for the location industry in 2009 yet. There simply remain too many barriers such as a fragmented and immature ecosystem, privacy issues and a lack of direct response models. On the other hand there will be increasing interest in free ad-funded services.

Carriers will continue to find it difficult to make a big impact on the location industry in 2009 with an increasing number of handset manufacturers, application developers, and location technology providers launching location based services (LBS) independently from carriers. While in 2008 there were signs heralding a return of carriers to the LBS space, this will be postponed by at least one more year as the economic climate will refocus most carriers on their core business areas.

All in all the challenging economic environment in 2009 may prove to have a beneficial effect on the location industry in the long term, as it will force companies to be more efficient and more user-focused, to adopt standards, and to be more inclined to work together with other companies. All this will accelerate the progress of the LBS ecosystem towards becoming a more mature, profitable and sustainable component of the wireless and consumer electronics industries.

Never mind about traveling that difficult world out there, what about staying “home for the holidays”? And at home, at least you’ll have your personal area network, your Wi-Fi, and maybe even your great indoor coverage on your Windows Mobile-powered mobile phone via your femtocell. Won’t you?

11 - The mobile phone market won’t grow in 2009

It has almost been a given that the mobile phone market always grows from year to year. For the first time since 2001, the global mobile handset market is likely to contract between 3 and 5 per cent. Replacement rates will be squeezed, and new subscriber adoption in emerging markets will slow perceptibly, resulting in a tough year for mass market handset vendors. But there are optimistic spots amid the doom and gloom. Smartphones sales could help to prop up sales and operating margins to some degree.

12 - RIM and Apple won’t have the smartphone market to themselves

A number of handset vendors have been eyeing the success of RIM and Apple in the smartphone market and we can expect them to reinvigorate their efforts to capture a slice of this growing (even in 2009’s shrinking overall market) and lucrative market. HTC, Samsung and LG, as well as a number of tier 3 handset vendors such as Huawei, will be rolling out their own smartphone products. Smartphones will not just be positioned for the developed world but also for mid-tier segments in emerging markets.

13 UWB will not reach the cell phone market in 2009

Since 2003, the WiMedia Alliance has promoted the standardisation and adoption of ultra wideband (UWB) as the next big thing for personal-area connectivity for both in-home and mobile markets. The market believed that UWB enabled laptops would lead the way to developing a critical mass of products, consumer awareness and economies of scale. In 2005 the Bluetooth SIG announced that it would incorporate UWB technology into its standards, bringing the technology even closer to the mobile space. 2007 was another promising year with many of the top UWB chipmakers receiving capital investments while UWB hubs and laptops were officially released into the wild.

Unfortunately, the path to cell phone adoption has gone astray. The critical mass of products has not occurred and the laptop manufacturers have gone soft on the technology. Intel decided to halt its UWB chipset development efforts and the most successful UWB chipmaker, WiQuest, went out of business. The Bluetooth SIG has started to hedge its bets and work with Wi-Fi as a means to deliver new high-speed protocols. With UWB chip prices well above the sweet spot for mobile phones, with limited products and consumer awareness, there is no reason for handset manufacturers to use UWB in 2009.

14 - Windows Mobile will not go open source

True: after a decade of updates, tweaks and real-world experience, the Windows Mobile platform remains a clumsy experience at best. Perhaps after several more years of Symbian OS leadership and a pervasive Android platform, Microsoft will recognise that its efforts are not enough to keep up with the speed and output volume that open-source projects can sustain. But don’t expect a change from the status quo in 2009.

Microsoft has long had an ‘us versus them’ view of open-source initiatives. After all, Microsoft’s greatest competition doesn’t come from any one company, but rather, from competing business models that threaten its software licensing business. Open source, advertising, and software monetised through a hardware sale, all threaten to disrupt its pay-up-front licensing business. And while it may grudgingly admit that there is more than one way to make money from software, it is difficult for Microsoft to change a business model that runs though every facet of the company.

Microsoft certainly recognises that Windows Mobile is in need of an innovation injection. It has loosened its grip on the user experience by allowing some licensees to innovate on top of the platform, such as Sony Ericsson and its interface panels in the Xperia, and Velocity Mobile, which also did significant work on the user interface. But while Microsoft seems increasingly willing to allow its partners to customise the OS, it’s hard to imagine it allowing non-partners and non-customers to do the same.

15 - Nothing will shift Qualcomm’s IP position in 2009

Qualcomm will be as strong in 2009 and onwards in all standards as it is today in WCDMA. No matter what pressure and positioning is applied by other companies, the sheer weight of its portfolio and its commitments to contributions in the standards body will mean that its position will be strong. Although the 4G domain is trumpeted as an opportunity to democratise the intellectual property arena, the market will still be dominated by the rich few, and the rest will suffer. Finally, the value of the wireless royalty rates levied on devices is far too high in comparison to the total sum of the wireless parts of smart devices in relation to other components such as displays and software. The urge to reduce the royalty level for the wireless part is high, but the status quo will be hard to budge and for sure it won’t happen in 2009.

16 - Femtocells will not be huge in 2009

The whole femtocell market is clouded in ways that could easily place it in the ‘what won’t happen in 2009’ bucket. Probably the easiest to call here is that the femtocell market will not be huge in 2009. The market will see initial introductions and some limited volume but the real spike in volumes will be seen in 2010.

That much is plain; other bold statements may not be as obvious at first glance. The first of these is that carriers will deploy femtos ‘in-band,’ ie in the same spectrum band as the macro network, and there will be negligible effect. If anything, the incorporation of femtocells in-band will have a positive impact on macro network quality.

The biggest challenges facing the femtocell market in 2009 will have to do with marketing rather than technology. What will the femto proposition be to the consumer? And what business model will support their introduction? We will see no radical marketing ploy on introduction and the offering will really be about voice and in-home fixed-mobile substitution. 2009 will also see the beginning of a shift in attitude towards embracing a more expansive femto service set that includes more connected home and social media leverage.

17 - In 2009, the WLAN big fish will stop eating the little fish . . . NOT!

It’s very dangerous to jump into the wireless LAN equipment pool, especially with sharks like Cisco and HP swimming there. This past year saw HP’s acquisition of Colubris Networks and a new joint venture that gobbled up Siemens’ WLAN enterprise equipment division. There are still some undernourished little fish (Extricom, Bluesocket, Xirrus, and Aerohive) in danger. This past year there were rumours that Juniper Networks would acquire Aruba Networks or Meru Networks, so no one is really safe. The analogy breaks down to some extent since the senior executives running all these companies, rather than trying to avoid being devoured, are probably shopping already for that new Porsche that their cashed-out stock options could buy. So imagine instead a small fish that flings itself at every passing shark.

18 - Cisco won’t abandon the search for new technologies

Cisco faces a problem that many companies would love to have. It has grown so large that it must constantly look for new opportunities to continue producing enough revenue to satisfy fickle investors. It so towers over the switching and routing markets that additional market share is very difficult to find. Pity that poor router product manager who must commit to growing his market share from 91% to 93%! Cisco’s control of the WLAN equipment market is almost as complete.

The problem is that there are few green fields left and selling add-on equipment to existing customers cannot bring in enough revenue to continue double-digit growth. The answer is new technologies. Cisco has jumped aboard the physical security market (video surveillance) and the telepresence market, and both areas are growing explosively. Still, the company likely will continue its acquisition pattern and broaden its technology portfolio in order to catch new markets just as they start to explode.

19 - Healthcare will be unhealthy for WLAN vendors

Wi-Fi vendors continue to view the healthcare industry as the mother lode when it comes to overall potential for revenue growth. While healthcare providers have been among the earliest adopters of Wi-Fi, they have the most real need to cost-justify the latest wireless LAN technology. Their highly mobile workforces (doctors, nurses, technicians, etc.) have piloted voice-over-Wi-Fi and now stand ready for large-scale adoptions of fixed mobile convergence, especially since cell phone coverage is very poor in most of these facilities.

This industry also has been among the earliest groups when it comes to piloting real-time location service hardware and software. It is poised to leverage its existing investment in Wi-Fi equipment to deploy Wi-Fi RTLS to track expensive medical equipment.

Finally, the incoming Obama administration has pointed to extensive cost savings for the industry that would come from modernising and computerising its administrative processes. To vendors, that prospect offers the sweet smell of dollars flowing for new wireless LAN equipment, as well as customised software to automate medical record management.

Of course in the deeply interdependent world of 2009, nothing happens in isolation. We’ve seen how North American, European and Asian market moods ricochet off each other. What won’t 2009 bring for Asia?

20 - WiMAX will not go mass market in Asia-Pacific in 2009

WiMAX has secured a number of toe-holds in Asia. Pretty much every market has one or more WiMAX licensees using 16d or 16e technology. Roll-outs of infrastructure in 2008 have been less forthcoming. Some carriers have cited the cost of WiMAX base stations but hesitation is much likely to be due to the scarcity of end-user equipment and mobile devices at suitable price points. The credit crunch would also not be helping. Credit and loans for large-scale projects are likely to come at large premiums, which could hamper mobile WiMAX operators’ game plans. As a result, WiMAX’s time-to-market lead over LTE could be further whittled away.

21 - China Mobile won’t hit its interim targets for TD-SCDMA adoption in 2009

China Mobile has been instructed by the Chinese government to deliver 100 million TD-SCDMA subscribers by 2011. China Mobile is unlikely to achieve its interim (and undisclosed) goal for TD-SCDMA subscribers by the end of 2009. This is not to say that China Mobile won’t ever achieve 100 million TD-SCDMA subscribers, but ramping up mobile device product volumes, average selling prices, customer awareness of (TD-SCDMA) 3G services, call quality and coverage will conspire to constrain demand. Oh, and the competition: China Unicom (with WCDMA) and China Telecom (with CDMA2000) have also injected considerable sums into their 3G network rollout and marketing plans. China Mobile does have an installed base of more than 436 million GSM subscribers, but in these more challenging economic conditions, the going will be tough.

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