@ Texas Wireless Summit: Data will force operators to concentrate on services, not GB

AUSTIN, Texas—Alcatel-Lucent’s Reinaldo Valenzuela said operators should offer more high-margin, low-bandwidth valuable services to end users to increase incremental revenues at a time when networks are under continuous pressure, and customers are enamored with free.
Speaking at the Texas Wireless Summit Tuesday, Valenzuela presented the concerns of many of today’s wireless operators: between the cost of operating networks, giving handset subsidies and sales and operating costs, carriers are starting to lose operating margins.
The day-long event, held at the AT&T Executive Briefing Center on the University of Texas-Austin campus featured discussions around research, network innovation, venture capital and startup companies. About 300 people attended the event. It was sponsored by the Wireless Networking and Communications Group that operates at UT-Austin, the ATI Incubator .
Instead of teaching consumers to pay by the megabyte, operators need to offer value to end users for services. People would likely pay $1 per month for an emergency service that would guarantee them priority access on the network when they need it. People are enamored with “free” so unlimited plans have been popular, he noted. Amazon.com, for example, found it could substantially increase sales by offering free shipping. Conversely, European wireless subscribers were unhappy with their wireless operator when it put a cap of 20 Gigabytes of data per month even though that cap is generous. “People need to pay for services, not byte rates.”
Valenzuela also addressed the conundrum facing today’s wireless operators as over-the-top service providers offer content, like Facebook access, over their networks without compensating the wireless provider. “Things that appear to be free are not. You’re just not seeing the bill,” he said in response to an audience question about why someone would pay for voice connectivity when they can get it free from VoIP providers.
Following are some other highlights from the event:
–The WNCG group is one of the premiere wireless research centers operating in the world today. With 17 faculty overseeing 140 Ph.D. research students, the campus oversees a variety of wireless research, overseeing a $5 million to $6 million annual budget, said Jeff Andrews, an associate professor at the university and director of the WNCG. While the organization does academic research, it also partners with businesses to push research forward. “We work with industry, not just inside the ivory tower.”
The communications industry is going to change profoundly in the next few years, Andrews said. Traditional cellular architecture, which was plotted out in a honey-comb coverage pattern, is going to look more chaotic as femtocells and picocells attach to the macrocellular network. “It’s the end of cellular as we know it.”
What is causing those small cells to become more commonplace? Data usage. But interestingly, the top 10% of data users consume 50% of the data, said David Gill, in the telecom practice at researcher Nielsen Media. Nielsen has new research that has found that 50% of Android operating system users access Facebook daily.
–Innovation is tackled differently by various members of the wireless ecosystem. The National Science Foundation is interested is transformative technology that is free from the constraints of standards, said William Tranter, director the NSF’s Communications Foundation. Tranter is most interested in funding research that has reasonable risk and reasonable rewards but has a high potential; will create jobs and that pass the Bubba test. (The Bubba test means you can explain it to a guy named Bubba in a bar and he will understand the reasoning behind the research.) This is necessary, said Tranter, because Congress approves NSF funding.
–Qualcomm Inc. has just introduced a chip called Flash Linq that bridges the gulf between managed networks that use licensed spectrum and unmanaged networks that use unlicensed spectrum. Flash Linq proponents see the world connected by thousands of devices based on proximity, to bring the Internet to the physical world, said Tom Richardson, a Qualcomm VP of Engineering who formerly headed Flarion Technologies Inc., an OFDM provider that Qualcomm acquired.
Huawei Technology Co.’s Maden Jagernauth said Huawei’s innovation path is straightforward: the infrastructure provider wants to solve problems for its operator customers.