WIRELESS TEST VENDORS STRUGGLE WITH CHANGE

The advent of wireless data created ample opportunities for test equipment vendors, primarily because it gave carriers much more to worry about than ever before. But carriers are rooted in how they approach their businesses, which means test vendors face the challenge of convincing them to change their thinking.

Mobile data has shifted carriers' focus from hardware to software, said Wayne Newitts, business development manager for the Americas at Tektronix.

“Carriers are embracing a new business model,” Newitts said. “They're moving away from, ‘Houston, do we have a connection?’ to issues of bad latency, packet loss and really slow data rates.”

According to Newitts, mobile data currently is experiencing triple-digit annual growth and is expected to maintain that pace for the next several years.

“More people bought wireless handsets with picture capability last quarter than bought digital cameras,” he said. “Voice is a commodity now. The only way for a carrier to differentiate itself and make money is to move into data.”

Test vendors whose systems can help carriers eliminate — or at least lessen — the chance that end-user customers experience slow rates or poor coverage should do well for the foreseeable future, Newitts said. “Those are the big fears. With all of these new technologies, those are the two main things that can go wrong.”

Moreover, the data revolution is driving the convergence of carrier networks that were once distinctly divided into voice and IP components, said Karl Traberg, director of strategic marketing for NetTest. “The people who were used to operating the networks were coming from the voice world, and they need strong tools to be able to monitor the IP side of the network as well,” he said.

Press-to-talk applications also represent a growing opportunity for wireless test vendors. Verizon Wireless and Sprint both recently introduced offerings, and Traberg said he believes the rest of the Big Six will be involved by the middle of next year. He said the SIP protocol, which is used for IP call control signaling, also handles mobility very well, which allows it to be used to carry voice over the IP network.

“That enables carriers to introduce [press-to-talk] services to networks where it wasn't possible before, which in turn requires test and monitoring to keep track of what's going on in the network,” Traberg said.

Test vendors also are finding opportunities in emerging markets. According to Wallace, worldwide subscribership will grow to more than 2 billion by 2008. While he agreed with Newitts that much of the incremental growth will come from greater acceptance of 2.5G services, Wallace said five nascent markets — India, Russia, Brazil, Thailand and China — also will drive growth. “The penetration into these emerging countries is just beginning now, and that's what's going to fuel the growth over the next decade,” he said.

With all that opportunity, the challenge for wireless test vendors is getting carriers to open their checkbooks. The hyper-competitiveness of the market has sliced margins razor-thin. Compounding matters is the insistence of investors that carriers get more out of what they already have, which doesn't bode well for new purchases, said Russ Byrd, vice president of North American operations for WillTek.

“It's a tough time in test and measurement,” he said. “The biggest reason is the market's insistence that the carriers make more money, or in some cases, start making money.”

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