CTIA Wireless Report: Can Enterprise Be a Dominant Revenue Stream?CTIA Wireless Report: Can Enterprise Be a Dominant Revenue Stream?

The cellular industry's big show isn't just about iPad apps and cool gadgets. Some execs are actually talking about the enterprise.

Deploying public cellular networks is an incredibly capital-intensive undertaking--that's one of the reasons why AT&T is buying T-Mobile, for the economies of scale and the ability to acquire more wireless spectrum. It also means that the talk this week at the cellular carriers' annual show, CTIA Wireless, centers on two concerns: Squeezing costs out of the network, and generating new revenue on top of it.

The big question for the enterprise has always been why the cellular carriers weren't more aggressive in pursuing enterprise business and in coming up with services tailored to the needs of the enterprise. As the consumerization of IT drives more of the enterprise telecom bill to the wireless side of the house, the time seems ripe for the carriers to re-focus on the potential for business-oriented services.

And it's not just a matter of more people cutting the cord. The increasing enterprise emphasis on moving communications to IP networks meshes well with cellular's relentless migration to broadband-capable networks, most recently with the technology that has dominated talk at this year's event in Orlando: 4G.

And, somewhat to my surprise, I found in some of the show's early conference sessions that the carriers are starting to talk enterprise services and features/functions. How real some of these are remains to be seen. But when carrier execs and their equipment vendors move quickly to talk about 4G in terms of enterprise presence services and business applications integration, it starts to look like maybe something's evolving here.

In a session this morning on wireless network architectures, Tom Jasny, VP at Samsung Telecommunications America, mentioned location-based presence and cloud-based services, both for the enterprise, as two of the most promising uses for 4G's higher bandwidth. And another panelist, Ken Wirth, president, E2E, 4G LTE Wireless Networks at Alcatel-Lucent, spelled out a detailed scenario that could have come straight out of any Enterprise Connect session on Communications Enabled Business Processes.

His example was that of a technician dispatched to fix a system at the top of one of those giant windmills you see in some parts of the country now. The idea was that the repair person climbs the tower, pulls schematics down from the cloud onto the tablet device she's carrying with her, but still can't diagnose the problem. So she establishes an HD video conference with the experts at the company that built the system, and thereby is able to fix the wind turbine and get it back on line.

Wirth concluded: "You can take it to almost any indusry vertical, and I think we'll see scenarios happen, and happen rather rapidly."

To those who have immersed themselves in enterprise communications, the example itself isn't technically remarkable or groundbreaking. What's remarkable is that this was the kind of thing the speakers chose to dwell on, at much greater length than they talked about enabling the latest interactive gaming or App Store sensation for the consumer market--though they did certainly talk about those as well.

But at least some carrier executives are looking at the promise of 4G and seeing a network for business users as well as consumers--and that has certain implications. Another panelist, Stan Zadrozny of Verizon Wireless, said broadcast TV networks have started exploring the possibility of using 4G LTE instead of microwave to carry their broadcasts from remote correspondents in some situations. But before they'd be willing to do that, he noted, they'll have to have assurance that these networks can solidly support QoS.

The upside for Verizon, of course, is that if they carry that traffic with that higher level of QoS, they fully expect to be able to charge the broadcaster a premium for the service. And that's where those twin obsessions--cost and revenue--come together for the carriers, and their enterprise customers.

The assumption on this panel, which went unquestioned, is that, as Stan Zadrozny put it, "Long term, there should be some relation between usage and billing." In other words, no more flat fees.

So the challenge becomes, quite simply: How do you make money from it? That question was posed but not completely answered in the architecture session.

Business models are an obsession here because those models are changing as cellular traffic migrates from voice-based to data-based (even if that "data" is actually packetized voice bits). Most operators, at least in the U.S., have begun moving toward usage-based pricing according to tiers, but ALU's Ken Wirth said, "Data tiers is a good start, but what's the next step?" His suggestion for a possible evolution of the pricing model was what called the "iPod per-click fee"--you want to download a video over a carrier's 4G network, you pay for each download--and you pay more during peak traffic hours and less during off-hours. "I think that's a model we'll see more over the next 12-18 months," Wirth said.

I don't know about that. It was a pricing model that worked fine for long distance voice when Eisenhower was in the White House, but today's consumer would find it a rude shock, I suspect, to be charged for a network-based experience on a per-click basis--as opposed to paying per song to the iTunes store, for something that the user expects to truly "own."

One business model aspect that several of the panelists liked was the notion that carriers have to get away from talking about their data tiers in terms of gigabytes or industry buzz terms like "Turbo-boost." Instead, several agreed, carriers should be packaging bandwidth and services together to meet specific user scenarios--a Facebook Package, or an NBA Package, or whatever--with bandwidth tailored to support the application being bought.

The challenge to this model is that that's not how users consume such services today, on the wireline broadband Internet. The most that Stan Zadrozny of Verizon could muster to say about services like Skype (which is offered on Verizon's network, by the way), is that, "over-the-top application providers are there--some of them are very good." But he insisted that carrier-based services are more interoperable and universal, pitting Instant Messaging against SMS and claiming the latter wins out because, "You can send an SMS to any phone in the world," where IM services are balkanized by IM provider (Skype, Yahoo, etc.).

A key takeaway from this discussion is that cellular carriers are grappling with the transition that their users have already eagerly embraced: That, as Samsung's Tom Jasny put it, "The traditional [wireless] device was a phone...it's now a computer."

That means the cellular carriers are making the transition their landline divisions made over the past decade and a half--they're now data carriers. They have to figure out how to charge for that in a way that makes them money, supports their capital requirements, yet doesn't alienate customers.

Which brings us back to the role that enterprises play as a class of customers--and one that the cellular carriers may need to look at in a new light. Cellular service has made its money off the gadget-crazy consumer, even as enterprise users spent increasing amounts of money for voice services that these users billed back to their companies on their expense accounts.

Only as corporate cellular voice usage exploded did there start to be a concerted effort to build contracts around this reality, to pool minutes, bill the enterprise a lump sum for the aggregate service that its employees used, and thereby manage the costs from the enterprise's perspective.

Now we're reaching a point where enterprises are looking at corporate contracts for 4G service. The first thing to say about this is that it's still early days, as this February article by Ben Fox and Kevin DiLallo on 4G procurement makes clear. Ben and Kevin do a great job of spelling out enterprises' requirements for any service that's actually meant to be used as an enterprise-grade service, and they evaluate how the carriers are doing at being able to provide such services.

What many enterprises undoubtedly want from the cellular carriers is an invisible fat pipe in the sky, over which the enterprise can connect to a cloud-based service. From the perspective of the utility that owns the giant wind turbine in our earlier example, that "cloud-based" service that the technician accessed was very likely based in the utility's own private cloud, or in a third-party cloud-based datacenter that the enterprise--not the cellular carrier--controls. Likewise, the video that the technician brought up most likely runs off media servers the utility "owns" in one way or another. That makes the carrier a bit-hauler.

But if the utility company wants that videoconference to be of any use to a technican who'd probably like to get her feet back on solid ground sooner rather than later, it looks like the carriers expect to charge for the QoS that will enable that level of service.

So there are likely to be some intense negotiations on the road to 4G services that enterprises can use, at a price they can afford. The good news is that at least some of the folks here at CTIA are thinking in terms of the enterprise.