Unprecedented bandwidth demand by consumers and enterprises will drive
communications services providers to offer more powerful bandwidth
solutions in the coming year, according to M/C Venture Partners, which
today is releasing its annual list of the Top 10 communications and
media industry trends to watch in 2010. New technology platforms and
capabilities such as 4G LTE (Long Term Evolution), DOCSIS 3.0 cable
modems and 10+ Gbps fiber-based data offerings are becoming
demand-driven realities, according to the venture capital firm’s list.
M/C Venture Partners compiled the list as part of its ongoing research
to understand industry trends and identify investment opportunities in
the communications, media, and information technology sectors.
According to M/C Venture Partners, the leading trend in the new year
will be this demand-driven shift to faster bandwidth connections to
quench the consumer and enterprise thirst for high speed connectivity to
match requirements of end-user applications. “Consumers are sharing and
demanding more rich media than ever before, and they are doing so in new
ways, which places more stress on their data connections. They expect
their Internet experience will meet their needs,” according to James
Wade, managing general partner, M/C Venture Partners. “The workplace
carries the same expectations, so enterprise networks are also being
pushed for faster speeds. We’ll be seeing upgrades in all areas.”
Trends on the M/C Venture Partners’ list include:
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10+ Gbps broadband speed, a prevalent speed at the core of the
cloud, is now being demanded closer to the cloud’s edge, to connect
enterprises and other network nodes. Continued demand increases
for Ethernet services and the shift away from copper-based TDM
services by large enterprises and by wireless carriers to support more
intensive network applications and more powerful Smartphones underpin
these changes.
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DOCSIS 3.0 combined with dense metro network footprints among MSOs
will change the nature of competition for enterprise broadband
services. The most recent evolution in the CableLabs standards
delivers a new level of high bandwidth asymmetrical broadband service
to the enterprise and will put pressure on other carriers to innovate
their business models.
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Video consumption amongst consumers will continue to drive an
unprecedented growth in bandwidth usage in the home. However,
consumers pay much less per megabyte of video than any other content
or service. This disparity in cost and value will cause revenue and
pricing models to adjust to re-capture latent value, which in turn
will trigger further investment in network services to consumers.
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With the emergence of 4G LTE, historically disparate wireless
network standards will begin merging into a globally scalable network
platform. This will lead to accelerated innovation as economies of
scale fully enable handset OEMs, application developers and carriers
as never before. This trend will become more discernible in late 2010
and may lead to further commoditization of wireless network services,
which carriers will carefully try to avoid.
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The popularity of social networking is driving competitors in the
wireless industry, including handset makers and applications
developers, to consider a next generation of “unified messaging” on
handsets. Email, SMS, IM and social networking will mesh into a
consumer-driven experience of seamless messaging.
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Disparate handset application universes create barriers and
switching costs for users and consternation among carriers who are
ceding market power to handset OEMs. Manufacturers such as Apple,
Nokia, Blackberry and Palm, adopting a handset-centric application
experience have shifted the balance of power from the carriers and
created barriers around their own handset domains. Carriers will
respond to mitigate commoditization of their networks.
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Smartphones will begin enabling voice applications in the
enterprise. Voice services continue to become more
application-oriented in the enterprise through VoIP-desktop
interoperability. At the same time, voice enhancements such as visual
voicemail and voicemail-to-text are creating improved user experiences
for mobile customers. Smartphones’ inherent computing and messaging
capabilities will combine these voice innovations, providing a
building block for fixed-mobile convergence.
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Recent consolidation of competitive local carriers points to more
consolidation in the future. Transactions by Comcast and
Windstream show that MSOs and RLECs have viable business cases for
acquiring CLECs and they will stimulate more activity in 2010 as CLECs
continue to develop their businesses and prospective buyers pursue new
market opportunities.
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Communications services companies will become more
application-centric and focus on the consumer’s share of wallet,
giving less consideration to network access methods. As cable
companies become more competitive with improved data offerings and as
wireless carriers deliver a stronger consumer value proposition with
mobile data, seemingly disparate products will encroach on each other
and communications services companies will focus on capturing a
“wallet share”.
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Unbridled power consumption in data centers will come under
increased scrutiny. Virtualization and decommissioning of older
infrastructure will unlock power cost savings, while cloud computing
and high-density data center environments will place new power demands
on operators. Energy management will become a key factor in improving
data center profitability and data center power management innovations
will appear on the horizon.
About M/C Venture Partners
M/C Venture Partners is a venture capital firm focused exclusively on
the communications, media, and information technology sectors. The firm
has invested over $1.8 billion into nearly 100 companies in those
sectors. Companies M/C has backed include Accent Health, Brooks
Fiber, Fusepoint, GTS, ICG Communications (restructuring), Legendary
Pictures, Lightower (formerly National Grid Wireless), Melita Cable,
MetroPCS, NuVox, Revol Wireless, and Zayo Broadband. The firm has strong
institutional backing from leading pension funds and endowments as well
as a long track record of success. M/C Venture Partners has offices in
Boston, San Francisco and London. For more information, visit www.mcventurepartners.com.