Editor’s note: Richard Deason is a 20-plus year veteran in telecommunications and is currently with Lightwave Consulting Group in Charlotte.If you are old enough to remember the 1969 song, “In the Year 2525,” by the one-hit wonders Zagar and Evans, then you can also recall the advances in telecommunications during the past couple of decades. The breakup of the Bell System in the early 1980’s contributed to new technological advances such as the Internet, Fiber Optics, Digital Subscriber Line (DSL), Cable Modem service, and a variety of wireless services.

So, what does the future of telecommunications hold in store for consumers and businesses? Allow me to put on my futurist hat as you join me in a peek at the telecom world a mere five years (not five hundred and twenty as the song might suggest!) from now.

Look Ma, No Wires!

Advances in Wireless Fidelity (WiFi) technology, based on the industry standard 80211.b, and the expected birth of WiFi’s bigger sibling, WiMAX (Worldwide Interoperability for Microwave Access), based on the developing 802.16x standard, will allow for data transfer rates of up to 70Mbps at distances up to thirty miles. Cities, counties, and municipalities throughout U.S. will install and manage meshed wireless hot spots throughout their areas. A number of economic models are emerging, ranging from “free” internet access subsidized by Voice-over-IP (VoIP) providers to cities charging for access in a fashion similar to other utilities such as water and sewer.

For all of you doubters, more than 80 government entities have already announced such plans, with the largest planned network in Philadelphia. It will be interesting to witness whether consumers will trust their phone company, their cable company, or their government for telecommunications services. I also predict this trend will quash the fee-based WiFi service providers such as Boingo and T-Mobile. If you disagree, then where did Cometa go?

Wireless IP Here, There, and Everywhere

A recent Gartner Group report estimated that by 2009, 90 percent of all new corporate telephone systems will be IP-enabled, and a Jupiter Research study indicates that more than 12 million U.S. households could switch to Internet-phone service by 2009. By 2010, not only will many telephone systems be IP-enabled; our automobiles, kitchen appliances, MP3 players and any other device that we may need to communicate with will have communications capabilities. As computer chips continue to grow smaller and more powerful with wireless connectivity built into each one, expect to see most new electronic devices to come equipped with wireless Internet connectivity during the next five years.

Add the aforementioned meshed wireless networks throughout metropolitan areas and you have a formula which allows not only for surfing the web from coffee shops and fast-food restaurants but also for downloading music into our MP3 players while walking in the park or having your credit or debit card authorized at your restaurant table instead of it “disappearing” for a few minutes. Or, just imagine using your wireless personal digital assistant (PDA) from your office to start the ignition of your car in the parking deck on a cold winter day, or locking the refrigerator door while driving in your car before your teenagers raid it after school. With wireless IP, the possibilities seem endless.

From Monopoly to Free Market to Oligopoly

Don’t fret but I expect there will be no more AT&T, MCI, or competitive local exchange carriers (CLECs) by 2010 as they are absorbed in a wave of industry consolidation. The telecommunications economic model will evolve into an oligopoly with probably 2-4 providers of all services in a local market. For example, BellSouth, SBC or Verizon, Time Warner, and the City of Charlotte may offer local, long distance, wireless, video, and Internet services to residents and businesses in Charlotte. A few niche providers will remain as Internet Service Providers (ISPs) and VoIP providers while the other remaining carriers will evolve into pure wholesale providers of local, long-haul, and Internet bandwidth.

While technologies such as WiFi and VoIP are driving down the cost barrier of entry in telecommunications, the hangover from the capital-inebriated days of the late 1990’s and early 2000’s is scaring most venture capital firms away from telecom investments. So, as the RBOCs, ILECs, and cable companies start to further exert their market dominance in the next few years, expect more stable pricing and fewer product innovations from these telecommunications suppliers for the period beyond 2010.

Caveats

Of course, predictions come with caveats. My safe harbor is the upcoming election. If Bush is elected, the RBOCs will remain largely protected from impending re-regulation and the oligopoly telecom model is more likely. If Kerry is elected, you can throw my predictions out the window since the model may be flipped with the RBOCs becoming strictly wholesale providers of network infrastructure to CLECs, ISPs, VoIP providers, video providers, and others.

So, with apologies to Zagar and Evans–

In the year 2010
If my CLEC isn’t a has-been
If my ISP can survive
Happiness we all may find

Lightwave: www.lightwavegroup.com