A significant new study from Insight Research attempts to take a broad look at possible telecom network evolution strategies, comparing the continued evolution of today’s networks, with the possibility of disruption by a move to an all-Internet approach or an all-wireless approach.

In an exclusive interview with Telephony, Insight President Robert Rosenberg said the study, called “The Future of Telecommunications, 2006-2011,” doesn’t attempt to predict how the global telecom network will actually evolve, but rather to project possible outcomes, depending on how new services are developed, priced and marketed in developed and developing markets worldwide.

“In terms of revenue, there isn’t a huge spread between the network evolution scenario, the all-Internet scenario and the all-wireless scenario, but there is a difference in the number of subscribers who are involved and the spread of broadband worldwide,” he said. “The truth about actual network evolution probably lies in the intersection of the three possible scenarios.”

For example, the number of worldwide broadband wireline users reaches 907.8 million under an all-Internet model, but only 407.7 million under a network evolution model and only 231 million under an all-wireless model. By contrast, moving to an all-wireless model doesn’t create the same disparity, since wireless access is expected to grow in all scenarios. Insight projects 3.8 billion wireless users by 2011 in the all-wireless model, versus 3.2 billion in a network evolution model and 3.3 billion in an all-Internet scenario.

The wireless scenario delivers service to a wider swath of the global population more quickly, however.

Total revenues for service providers actually look better in the network evolution model, but that scenario is based on the assumption that users don’t flock to Internet-based services or all-wireless services due to concerns over quality or cataclysmic events.

“The reason the evolving scenario shows the best revenue is because we believe the entrenched providers will be reluctant to lower their rates in order to compete,” the report states. “They expect to win the battle with the help of superior quality, service usability, service availability or service support. Indeed, both of the other two scenarios should be viewed as more likely to win based on price, as long as they don’t have major problems with service quality, service usability, service availability and service support.

Total revenue--wireless and wireline, narrowband and broadband--hits $1.6 trillion in the network evolution scenario for a compound annual growth rate of 7.4%, $1.55 trillion in the all-wireless scenario for a 6.6% CAGR and $1.4 trillion in the all-Internet scenario for a 5.4% CAGR.

The study isn’t intended as a network-planning tool, or product management guide, Rosenberg said.

“The genesis of this study was the uncertainty that hangs over the industry that we write about on a quadrant by quadrant basis,” he said. “We wanted to take a broader view. So we posited three possible scenarios for how the future would unfold. We see this as a tool that is part of a strategic planning process that examines what would your business look like 10 years from now.”

The faster pace of network evolution has made it more important for service providers to do longer range planning, he added.

“The phone network evolved over 100 years, the wireless network over 30 years and the Internet over the last decade,” he said. “In terms of telecom planning, the rapidity of the scene change is obvious.”

The study takes into account factors such as user lethargy, the desire of service providers to protect their entrenched equipment, the rapid movement of new competitors and regulatory/investment factors. It examines both how quickly the PSTN fades, and how rapidly new technology such as broadband wireless takes hold, depending on the scenario.

Insight also addresses the core issues around Net neutrality--how the Internet will evolve and who would and/or should pay.

“We do not subscribe to the idea that very low-cost or no-cost communication using wireless or the Internet is the wave of the future,” it states. “This is misleading when all of the revenue sources for communication services are added in. For example, the user, in one fashion or another, will have to pay for a broadband Internet connection to use lower-cost VoIP. If the use of advertising to fund broadband doesn’t work, users will find they have to pay some other way. If municipalities offer ‘free’ Internet service, local taxes are likely to rise in order to continue the build-out and maintain the ‘free’ service.”