wireless foresight conference, june 5 wireless foresight conference june 5 2002

Wireless Foresight Conference, June 5

Wireless Foresight ConferenceJune 5 2002


An afternoon about the Wireless Future• Project Wireless Foresight

- Four scenarios of the Wireless World in 2015

- Challenges facing Industry

- Implications for research

• Alternative view of the futureProf. Eli Noam, Columbia University”Open Access and Industry Cyclicality”

• Panel discussion ”Research and Research Funding for a Positive Wireless Future”

Jens Zander (KTH, chair) Eli Noam (Columbia University)Bo Dahlbom (SITI) Bernt Ericson (Ericsson Foresight)Bertil Thorngren (Stockholm School of Economics)


Wireless@KTH• A Center for Research and Education

• Focus on Wireless Systems: Mobile Computing & Communication

• Joint research between academia and industry- Common reserach projects and programs

• Industrial partnership- Active participation: Internships and Research Fellows

• Partnership program on four levels- Founding partners

- International partners

- Associate partners

- Network partners


A Vision Driven Research Approach

Wireless Foresight

”Think Tank”

CenterVision

2015and

beyond

Center Projectson

Key Problems

Graduates

Innovations

Papers

Techno-Socio-

Economic-Scenarios

Partners

Other scenarios(WSI, WWRF, TF)

External researchers


Industrial Partners• Initial donation

Ericsson, Telia, Microsoft, Nokia

• Founding partnersEricsson, Telia

• Other Industrial Partners (as of May 2002)3GIS GenistaAllgon KevabAxis MSIBIC Mid Sweden NorthstreamBlue Factory OperaxCarnegie Semcone-tenna Tele2Europolitan Widermind


Academic Founders• Carl Gustaf Jansson

Knowledge and Communication Engineering

• Gunnar KarlssonTeletrafic Systems

• Bastiaan KleijnSpeech Signal Processing

• Gerald ”Chip” MaguireComputer Communication Systems

• Björn OtterstenSignal Processing

• Jens ZanderRadio Communication Systems


Four scenarios of the Wireless World in 2015

Bo KarlsonWireless@KTH

[email protected]/foresight


Project Wireless Foresight• September 1 2001 – June 5 2002

• Objectives- Create scenarios of the wireless future (2015)

- Identify key research areas for the Center and in general

- Create a shared vision of the wireless future within the Center

- Build network, create visibility

• Focus on the development of the Wireless Industry- Vendors (infrastructure and terminals)

- Operators

- Service providers and developers

• Global scope


Wireless Foresight, the report• Four scenarios

• Trends and Fundamental drivers

• Technical implications from the scenarios

• Key research areas

• Challenges for industry


Four Scenarios of the Wireless World 2015• Wireless Explosion – Creative Destruction

• Slow Motion

• Rediscovering Harmony

• Big Moguls and Snoopy Governments

It’s not about describing how the world will look,but how it might look!


Wireless Explosion – Creative Destruction


Wireless Explosion – Creative Destruction

• Usage and industry growing rapidly - Fast technological development- An explosion of wireless applications and services- All markets growing fast

• Old telco industry loses to datacom attackers- Datacom industry (Internet & IP) winning


Main characteristics• A fiercly competitive world

- Intense competition, many players - Infrastucture based on IP and datacom paradigm - Market leaders unable to expand ”monopoly” power

• Active users want open IP access and take control- Advanced users after 20 years with the Net: Choice & Freedom - ”Anarchistic” underground culture: IPR-enforcement difficult - Mobile life-style- New spectrum released but mostly for unlicensed use- Ad-hoc deployed networks, do-it-yourself wireless access


Disruptive market change• Modularization

- Standardized interfaces: IP, open APIs, software platforms etc.- Closed telco-style systems lose - Technologies and functions dis-integrating - Each module a niche market with intense competition

• Creative Destruction - Rapid development transforming industry- Old market leaders lose and attackers win- Operators and telco equipment vendors vulnerable


Slow Motion


Slow Motion• Slow pace of development

- Services, Industry, and Wireless Technology

• Problems affecting the Wireless industry- Financial crisis among operators: a domino effect- Global economic recession- 3G fiasco- Health problems from radiation- Environmental awareness - High power consumption and low battery capacity- Managing a heterogeneous and complex wireless

world


Main characteristics• The mobile lifestyle loses ground

- Urbanization slows down in the industrial world

- More people work from home or local offices

- Traveling increases, but very slowly

• No service explosion- Simple services popular (payments, MMS, news, music etc.)

- Advanced services too expensive

- Mobile professionals and Industrial users the only driving segments

• Big NICs catching up


Wireless a mature industry• Slow pace of growth

• Low profit margins

• Increased concentration in most segments

• Traditional Telcos still dominating

• Operators- Consolidation leading to fewer actors

• Equipment vendors- Focus on NICs and on traditional operators

• Terminal vendors- Large segment of cheap and reliable terminals


Rediscovering harmony


Rediscovering harmony• The wireless industry refocusing

- Reasonably fast pace of development- Simple services for the mass-market- Complex solutions for niche segments- Local operators co-exist with global communication providers

• A new lifestyle- Postmaterialism- Quality of life (family and friends)- The environment is sacred


Main characteristics• Individualism, environmentalism, and social awareness

• Both local and global lifestyle- From crammed cities to local communities- People live locally but think globally - Less daily travel but increased global travel

• We have slowed down- Information overflow eventually made us ”tune out”- Social life and environmental concern most important

• Peoples’ needs are in charge- Being old means being wealthy, active and demanding- Youths demand 24/7 services, personalized technology

and ethically and environmentally aware companies


An industry trying to adapt• The wireless industry tries to refocus

- No wireless explosion, but still quite a large market - Brand important, but in a new way- ”Tribes” and subcultures with different needs- Global and local operators/service providers - Industry struggles to understand the ”new” marketplace

• Only in the industrialized world- Change of values linked to socio/economic development- NICs still have postindustrial values- Large but traditional markets


Big Moguls and Snoopy Governments


Big Moguls and Snoopy Governments• Wireless industry stagnant

- Less competition- No opportunities for new players- The big players dominate

• Governments exert tight control- Issues of security and copyright driving - Government can more easily control few players

• Large companies become even larger- Mergers of companies into ”Moguls”- Moguls grow on all markets


Main characteristics• Governments

- All communication tightly surveilled- Very little new spectrum released - No new players allowed on emerging markets and

niches

• Moguls- Brand rules- Focus on user convenience, security, and safety- Operators/service providers are global companies- No wireless explosion but users are satisfied


A Perfect World• Privacy

- Companies not to give out information- Government can acquire information

• Security- All transactions secure and surveilled- Piracy not possible

• Freedom- Not much, but it is accepted- NICs might host data havens/providers


TechnologySocio-Economic-

PoliticalBusiness and

IndustryUsers, Values and

Attitudes

Processing power will increase exponentially

(Moore’s law)Globalization will increase Industries mature over time

Values change at the pace of generations

Fiber and memory capacity will increase exponentially

Democratization will incresae

Companies strive towards monopoly

Individualism will increase

Capacity in air will increase but slower than in fiber

Aging population

(Industrial world)

Attractive markets attract new entrants

Importance of family and friends will increase

Battery capacity will increase very slowly

Shift towards knowledge industry (OECD & NIC)

Scale & learning economics (improving p/p)

Value of free time and experiences will increase

Miniaturization of components will increase

Market economy prevails (however counter

movements will continue)Complexity diseconomics

Need for mobility and communication will

increase

Digitalization will increase Fight against terrorism and crime, in particular ”cyber

crime”, will continue

Value chains will increase in complexity

(value networks)

Inceased technology adoption in everyday life

Standardization will increase

Social differences will increase

Wireless infrastructure cost will fall slower than for

electronics (Jens’ law)

Different user groups have different values and needs

Internet development dominating

Increasing amount of information and choices

Value of network increases with number of nodes

(Metcalf’s law)

Health concerns will increase

Large and complex systems become

increasingly difficult to control centrally

Air bandwidth is affected by political decisions

Value of information and knowledge will increase

Environmentalism will increase

Fundamental Drivers of Development


14 trends shaping the scenarios1. Development will be more user driven

2. User mobility will increase

3. The service and application market will grow

4. User security, integrity, and privacy will become more important

5. Real or perceived health problems due to radiation will6. become more important

6. Environmental issues will become more important

7. Spectrum will become an increasingly scarce resource


14 trends shaping the scenarios cont.

1. 8. The wireless Industry will grow

9. The big NICs will continue their positive development

10. Market concentration in the wireless industry will change

11. The fight for market dominance in the wireless industry will intensify

12. Terminal usage time and complexity management will become increasingly important problems

13. 3G will be implemented

14. Protection of IPR on content will become incresingly difficult


Challenges Facing Industry

Jonas LindStockholm School of Economics


• Disruptive market change – winners and loser

• Spectrum release – faster and smarter

• 3G debt threat – smarter spectrum policy

• Cheaper infrastructure – fewer masts, more electronics

• Better batteries – users will not accept daily recharging

• Better usability – make it seamless, useful and intuitive

• Complexity management – IP, modularized, open APIs

A few Challenges for Industry


• Industry moving from vertical integration to markets in horizontal layers

• Disruptive innovation – an attack ”from below”

• Incumbents often arrogant and miss the warnings: ”inferior technology”

Is the wireless telco industry in for a disruptive attack from the datacom industry?

How will the wireless telco industry respond to disruptive attackers?

Disruptive market change – winners and loser


Industry moving from vertical integration to markets in horizontal layers

Customer relations

Network managment

Services

Access network

Back-bone network

Old incumbents: Vertically integrated

New marketplace: Excellence in one segment

Customer relations

Network managment

Services

Access network

Back-bone network


Disruptive innovation – an attack “from below”

Time

Performance

log

arit

mic

sca

le

New technology

enters low-end market

Unix and Vax computers

New technology replaces old technology Market for old

technology

PC Wintel computers

Market for attacking technology


Logics of disruptive innovations• Attackers with radically cheaper technology (ten times cheaper)

• Enter on low-end market – unreliable, but fullfil unmet need

• Quickly build volume (*10), eat away low-end market from incumbents

• Old technology responds by retreating into high-end segment

• High sales volumes give attackers fast performance growth

• Attackers fix flaws in design along the way

When new technology is ”good enough” for most customers, the old technology fails!


Incumbent Attacker

Main-frame computers Minicomputers

5.25 inch disk-drives 3.25 inch disk-drives

Mini computers Wintel PCs

Cable-actuated excavators Hydraulic excavators

High-street furniture retail ”IKEA” business model

Integrated steel-mills Minimills (using scrap steel)

Pre-industrial craft products Industrial mass production

Xerox copiers Canon/Ricoh tabletop copiers

Incumbents often arrogant and miss the warnings: ”inferior technology”


Weak entry points for attackers • Unlicenced spectrum • Self-deployed networks (”the $39 wireless access point”) • ”Good-enough” quality at a tenth of the price • IP, modularization and open APIs give much lower complexity• No hierarchical control • Agile, hyperfoced firms (layered, excellence in one segment) • WLANs and WISPs

Telco universe• High-cost business model (extreme reliability & quality)• Centralized hierarchical control (high complexity system management)• Slowness inherent for vertically integrated firms

Telco market power from • Control of spectrum• Geographical physical infrastructure • Customer lock-in

Is the Wireless telco industry in for a disruptive attack from the datacom industry ?


What will happen?

• How will the Wireless Telco industry respond to disruptive attackers?

• Counter and grab the opportunities or ignore and lose?


• Mobile (90% of population) has below 10% of all usable spectrum (0.4-5 GHz)

• Rest is controlled by legacy users, the millitary (30%) and TV broadcasters

• Spectrum shortage is hampering competition and forcing operators to build unnecessary expensive infrastructure

• Spectrum policy handled by slow moving diplomatic WRC meetings (no significant spectrum release possible until 2013)

Faster spectrum release must be put on the political agenda

Spectrum release – faster and smarter


How to solve the spectrum issue

• Increase competiton by releasing lots of new spectrum - To operators- For unlicensed use

• Replace auctions with revenue sharing during life-time

• Sell spectrum and use proceeds to compensate the military and other legacy users


3G debt threat – smarter spectrum policy

• Wireless spectrum is valuable due to shortage

• Massive spectrum release will reduce value of 3G licenses

• 3G operators paid for licenses under “the old regime”

Compensate 3G license ”winners” when massive spectrum release reduces value of their spectrum


The 3G debt problem (cont.) • 3G debts threaten to trigger a financial crash

- The auction party in 2000 (€120 billion) - Future 3G build-out commitments (€140 billion) - Future cost for hand-set subsidies and marketing- In a deep recession, financial market will cancel telco credits

• EU, industry, and governments must deal with the problem

Alleviate demands from regulators and allow unlimited infrastructure sharing (consumer will not benefit from bankrupt operators and half-built networks)


Cheaper infrastructure – fewer masts, more electronics• Wireless of today based on a high-cost business model

- Dedicated infrastucture with masts, macro-cells, cabling etc.

- Spectrum shortage, keeping tariffs high

- Homogeneous network, same in rural as in city centers

• Data traffic explosion can not be carried on traditional macro-cell networks (GPRS and 3G) at affordable costs

• Future infrastructure must build on a new topology- Possible cost cuts of 70% (if no dedicated towers, etc.)

- Different networks in rural areas, along roads, and in cities?

- Different networks for broadcast and personal communication?

- Ride on to the existing fixed Net in urban areas?

- Self-deployed, optical wireless, ad-hoc, peer-to-peer?


• Disruptive market change – winners and loser

• Spectrum release – faster and smarter

• 3G debt threat – smarter spectrum policy

• Cheaper infrastructure – fewer masts, more electronics

• Better batteries – users will not accept daily recharging

• Better usability – make it seamless, useful and intuitive

• Complexity management – IP, modularised, open APIs

Summary – industry challenges


Implications for Research

Aurelian Bria

Royal Institute of Technology (KTH)

[email protected]


Scenarios TechnicalImplications

KeyResearch

Areas


Seven Key Research AreasL

ow c

ost

infr

stru

ctu

e a

nd

B

usi

nes

s m

ode

ls New and advanced services

System Integration

Resource Management

Air interfaces and protocols

He

alth

an

d

En

vironm

enta

l issues

Usability


Technical Implications (”Best case”)

• System Characteristics- Heterogeneous infrastructure- Small cost per transmitted bit, etc.

• Terminals- Wide range of shapes and capabilities- Long usage time before recharging, etc.

• Services- Wireless services will become a commodity- Services will be independent of the infrastructure, etc.


Key Research Areas

• Air-interfaces and Protocols

• Resource management- Sharing and coexistence- Decentralized management- Dynamic spectrum allocation, etc.

• System Integration- Complexity management- Multimode and adaptive terminals, etc.


Key Research Areas (cont.)

• New and advanced services- Context awareness- ”Smart” spaces- Ubiquitous services and sensors, etc.

• Usability- Inteligent user interface- Personal networks, etc.


Key Research Areas (cont.)• Cross-disciplinary research

- Low cost infrastructure and business models”Affordable wireless services”

- Health and Environmental Impact”Perceived “safe” technology”


Conclusions

• The demand for wireless communication services will increase

• New technology, services, and business models need to be developed

• There are many engineering challenges out there

• There is currently a big need for research on wireless- Cross-disciplinary research is important- Focus on the end user

wireless foresight conference, june 5 wireless foresight conference june 5 2002

Documents

wireless foresight conference

wireless systems

complex wireless world

wireless technology

bo karlson wireless

industry slide

slow motion slide

industry implications