CTIA Preview: Wireline's future is wireless

Many wireline telcos need no reminder of just how effectively their lunch is being eaten by the wireless part of the telecom industry, but the CTIA Wireless 2009 trade show is ready to deliver plenty of them anyway. That's always the story, is it not? While wireline companies--or the wireline units of the multi-service providers--struggle to figure out how to curb wireline revenue loss and customer loss, the wireless guys continue to count their customers, and their revenue, and their future prospects.

How soon we forget how critical wireline is to those future prospects of the wireless market, and if it's time again for the 2009 CTIA Wireless show, then it is time again for our annual reminder that wireline telcos indeed have a future ahead of them, though a future that looks not a whole lot like the past.

The ability of the wireline operators to deliver plenty of it backhaul capacity will be critical to the ongoing success of mobile data, content, entertainment and business applications. That should come as nothing new to many wireline telcos, since supplying leased lines to wireless companies--even their own wireless sister companies--has been a segment of their overall business for more than 20 years.

The difference now is that as many forms of communication and entertainment increasingly migrate to a mobile world, backhaul is becoming a much bigger business, requiring more attention and a broader variety of more efficient solutions. The challenge to overcome is that some traditional wireline companies may not view backhaul as a business opportunity for which they need to expend marketing energy or any horsepower from their innovation engines.

The proof that backhaul is a business lies in the fact the companies who haven't traditionally served wireless companies with backhaul capacity, such as CLECs and cable TV companies, are wanting to get into the market and win mobile backhaul contracts away from the established telcos. Even the wireless companies themselves, looking for less expensive and more efficient backhaul solutions than they have been presented with by the old-line telcos, are getting into the act and looking for ways to operate their own backhaul facilities.

Backhaul is a business that requires telcos to focus on service providers as their customers, but again, that should be nothing new to most of them, especially in an age when everyone agrees that competitors are sometimes customers and partners, too. This doesn't mean that wireline telcos should give up in the battle over the home. Some of them, with plans to deploy femtocells, are thinking "if you can't beat 'em, then join 'em." Others should aggressively move toward VoIP and broadband-based triple play services that acknowledge how much value of voice has changed. Perhaps they should even consider partnering to sell other companies VoIP and wireless services into the homes that their networks connect.

If pursuing backhaul as a growing business opportunity and thinking different about residential telephone service sounds like doing business according to the dumb pipe philosophy, then so be it, because it will be a dumb pipe filled with money. -Dan

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