Editor's Note: This article originally appeared in RCR Wireless News' January Special Edition Wireless Infrastructure: The Engine for Economic Recovery. Look for our March Special Edition, coming soon.

With U.S. wireless penetration surging past 90%, wireless carriers are being forced to become more creative in finding ways to continue to grow their subscriber bases.

Recent movements have been made around the prepaid market in an attempt to coax the few remaining consumers who have shied away from wireless services either due to poor credit scores or those averse to signing a contract for service. But, that is only expected to be more of a market share shift amongst carriers than any real increase in customer numbers.

More lucrative efforts have been made around luring customers into acquiring more than one mobile device with PC cards and embedding cellular services into a broader range of consumer electronic devices.

Carriers have also begun to move more aggressively into the machine-to-machine space as a means of generating revenues. While these offerings typically pale in generating revenues with more traditional services, there is often a much lower operating cost associated with M2M that makes the services appealing.

“It's all about carriers being able to monetize their assets,” said Kittur Nagesh, director of worldwide service provider marketing at Cisco Systems Inc. “Whether it's their spectrum assets or their infrastructure assets. That's an important operating pillar for wireless carriers. In the past every bit across the network made money. Now there is almost a negative correlation; the amount of data is exploding and the cost of transmitting those bits is going up, but the revenue generated from those bits is going down.”

A number of operators have announced partnerships with M2M companies looking to tap into a market that is expected to generate billions in revenues worldwide as well as billions more in device and equipment sales. These partners include Kore Telematics, nPhase and Jasper Wireless, among others.

The diversity of such M2M offerings is mind boggling. For years analysts and industry observers talked about embedding wireless technologies into everyday household appliances. That thinking has now exploded into the possibility of embedding wireless technologies into virtually every appliance, machine or device imaginable.

Sufficient support

Some question whether the wireless industry is ready for such an explosion of potential “users.”

“The scale is really unprecedented,” said Nagesh. “If it takes off like I think it will over the next 10 years, the scale could be in the billions of dollars in the U.S., and worldwide could be $50 to $100 billion. Are they ready for that type of scale? Every machine needs to be authenticated. How do you know it's not rogue? There's a huge bombardment on the control plane.”

Nagesh added that while the industry may have the coverage and capacity to handle the current load of voice and data customers, more or less, the thought of millions of “machines” trying to access wireless networks could prove a monumental challenge.

“Many of the verticals that would tap into the wireless network would do so using low-bandwidth applications that would have minimal impact,” Nagesh explained. “However, these could also have a trigger that would allow them to morph into a high performance, high data-rate transmission device. If it's surveillance, it may not transmit anything until someone intrudes into its coverage zone. But once that happens the device may change into a high-definition streaming video mode that would be transmitting live images to an operations center. I'm not sure people have understood this level of impact for M2M.”

One way to handle that impact is for carriers to fortify their networks with next-generation wireless technologies like LTE and WiMAX that use an all-IP core that can more efficiently move bits of traffic over the network compared with today's circuit-switched, packet-data hybrid networks. That is already being done by a number of nationwide operators as well as smaller, regional players.

These networks are expected to allow operators to transmit greater volumes of traffic that could allow for better integration of “bursty” users like M2M equipment.

One downside to current plans are that those networks are not expected to provide the same level of coverage of today's 2G and 3G networks for several years, if ever. This was one of the sticking points to the Federal Communication Commission's plans to auction off 700 MHz public-safety spectrum that would have required the winning bidder to build out a next-generation network with greater coverage than current commercial networks provide.

Deeper challenges

Beyond the basic network challenges, analysts note carriers will need to develop new business models in order to support M2M services. Low recurring revenues must be balanced by low acquisition costs and tempered with a customer base that is very unlikely to churn.

“No one is going to spend $60 per month for grandma to have a wirelessly enabled picture frame in her house,” said Steve Linke, associate director of product development at Verizon Wireless. “We are working on different pricing models to manage this.”

There are also issues of making mobile connections as easy to configure as current wired ones.

ABI Research's Sam Lucero noted that it's 30 times more difficult to arrange a remote connection over cellular than over wired Ethernet. And device self diagnostics need to be improved.

“The industry has to solve this if cellular is to be ubiquitous in the market,” Lucero said.

Lucero also noted that the industry needs to work on standards that will provide those looking to integrate wireless modules into consumer and enterprise customers with some future-proof assurance that their integrated products will continue to be supported.

Despite the numerous challenges, there is little doubt that the M2M space is set for tremendous growth. The biggest question remaining is whether the wireless space is in a position to take advantage of that growth.

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About 3,800 fewer people were employed in February vs. January in the telecommunications sector, but because the numbers are seasonally adjusted, the unemployment rate declined .2 percentage points to 8.6%, according to preliminary figures from the U.S. Department of Labor. Average hourly earnings in the sector totaled $28.12 in January, up 20 cents per hour from the previous month.

Overall, the nation's unemployment rate held steady at 9.7%, with job losses in the information and construction sectors, but more jobs added in the temporary help category. Telecommunications falls under the broader information sector.

In the computer and electronics products segment, overall the sector had 1,900 fewer people employed in February, with an estimated 1.087 million people working in the sector. Computer and peripheral equipment employees were down about 200, while employees in the communications equipment sector were up 800 employees in February. Employment in the semiconductor segment showed little change, with 100 fewer employees in February. Employment in the telecommunications sector was down 3,800 employees in February, to 949,000 people working in the industry.

Employment in the wireless subsector, which runs a month behind the larger sectors, showed a 1,800 drop in employees from December to January, with 195,200 people employed in January. Women filled 75,000 of those jobs, a drop of 1,200 since December. Employment in wired telephony also dropped, from 619,000 employees in January to 615,300 in February.

By state, California remained steady, with 31,800 people employed in November and December, the most recent figures available. Employment in Georgia also remained steady with 12,700 employees in the wireless sector. In Kansas, where telecommunications is not broken down between wireless and wireless, employment was down 200 people to 22,000 in December. In New Jersey, which also does not break out telecom employment, about 38,700 people were employed in the sector, down about 100 from November. Telecom employment in New York saw an uptick of 400 to 52,900 people employed in the sector in December. In Texas, employment ticked down 100 people to 92,600 people employed in the space.

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Editor's Note: This article originally appeared in RCR Wireless News' January Special Edition Wireless Infrastructure: The Engine for Economic Recovery. Look for our March Special Edition, coming soon.

Wireless networks are the cornerstone of the wireless industry. These capital-intensive investments are a key building block to the success story that is the wireless communications industry. Networks are key growth drivers to the nation's economy as well. CTIA estimates wireless operators collectively spend about $20 billion a year on their networks, which drives the $75.8 billion in revenue generated nationwide on wireless services for the first six months of the year. The industry association also estimates nearly 246,000 base stations are connecting the nation's wireless networks.

The ecosystem surrounding infrastructure is extensive and includes everything from major telecommunications equipment manufacturers to maintenance grounds keepers at tower sites.

Following is a brief description of the major sub-segments within the wireless infrastructure ecosystem and some of the players that offer products and services in the sector:

Telecom equipment manufacturers/Original equipment manufacturers – These multinational giants build the physical networks using their own equipment and components from a wide range of suppliers. Networks consist of the core and radio access network. Companies in the space include Ericsson, Huawei, Nokia Siemens Networks, Alcatel-Lucent, Motorola, Juniper, Cisco, IBM, Dell, Hewlett-Packard, Fujitsu and ZTE, as well as smaller players including Proxim, Redline, Alvarion, Airvana, Bridgewave and Ciena.

Component suppliers – These companies are a diverse group; some of them offer solutions for certain segments of the network, while others offer products that focus on a specific area. Some of the products they sell are RF components, switches, repeaters, routers, power amplifiers, subsystems, duplexers, antennas and cooling filters. Players in the space include ADC, Commscope/Andrew, Ceragon, Deltanode, Powertel, Rohn, Sabre, Summitek Instruments and Valmont Site Pro 1.

Tower companies – Led by the large tower companies and the carriers themselves, towers are the backbone of the wireless networks. American Tower, Crown Castle International Inc., SBA Communications Corp., Global Tower Partners and TowerCo are the top independent tower firms in this space, but there are hundreds of small and medium-sized tower companies across the country. Besides the traditional outdoor tower sites, distributed antenna networks – that work both indoor and outdoor – are a subsector of this group, as are rooftop towers.

DAS providers – A subset of antenna towers, these distributed antenna systems use a combination of RF and fiber-optic technology to transfer the RF signal in hard-to-site areas, both indoors and outdoors. Players include most of the major tower companies, as well as independent firms like NextG Networks, ExteNet, Mobilitie, NewPath Networks and others.

Service providers – These site acquisition and construction shops manage the actual network buildout for the carriers, working in close contact with the carrier and the sub-contractors. In this space, companies can be one-stop shops or just specialize in certain subsectors of the ecosystem. Indeed, some carriers and infrastructure companies use staffing firms for a variety of positions. Players in the space include BCI Communications, Bechtel, Black & Veatch, Computer Science Corp., General Dynamics, Goodman Networks, KCI Technologies Inc., the Lyle Company, Mann Wireless, MasTec, nsoro, SiteMaster, Smartlink, Tectonic Engineering & Survey Consultants, TEKsystems and TowerSource.

Backhaul providers – Backhaul providers take the signal and route it back to the switching station using fiber Ethernet, microwave and coaxial cable technologies. Players in the space include Redline, Dragonwave, Fujitsu, FiberTower, Level 3 and NEC, as well as local exchange carriers and cable companies.

Cabinets/Enclosures – More than just the physical shelters that house components at the tower site, shelters include climate control systems and power and backup power supplies. Some players in the space include American Products, Accu Air, Adtran, Emerson Network Power, Powerwave and Tessco.

Distributors –These companies help get products out to the field. Some of the companies in this subsector include Hutton, Primus Talley and Tessco.

Telecom Shelters – These shelters house equipment at the site. Some of the companies in this space include - American Products, Fibrebond Corp., Reliant Shelters (a division of mobile Modular Express), Sabre Industries and Tuff Shed.

Tower manufacturers --These companies make the fiberglass and steel structures that house the cell sites. Companies in this space include Caterpillar, Fiberglass Specialties, Fred A. Nudd Corp., FWT Inc., Glen Martin, Rohn, RSI, Sabre, TransAmerican Power Products, Valmont Structures and World Tower Co.

Generators/Power Products – Power is a significant portion of every network and backup power needs are increasingly important during times of crisis, as demonstrated during powerful hurricanes the last few years. Some of the companies that operate in this space include Caterpillar, Cummins Power Products, DC Group, Generac Power Systems Kohler and Jadoo Power.

Lighting – Federal law requires cellular sites to be properly lighted, and it also makes good business sense. Some of the companies in this space include International Tower Lighting, Lighting Flash Technology, an SPX Division, Specialty Tower Lighting, TWR Lighting and Unimar.

Professional services –This group encompasses everything from law firms that represent companies on zoning and land-use laws, as well fixed as site-acquisition and environmental assessment and compliance experts, as well as permitting and utilities coordination experts. Some of the companies in this space include Davis Wright Tremaine, Patton Boggs, Phillips Lytle, Saul Ewing, and Venable, although there are countless businesses that specialize in certain practices and certain geographic regions of the country.

Associations, professional groups -- PCIA represents the infrastructure association and coordinates with state wireless association programs, or SWAPS as well as the DAS Forum. In addition, CTIA, which represents carriers at the national level, also comments on tower issues and the like. The Telecommunications Industry Association represents hardware manufacturers, while the Wireless Communications Association connects wireless broadband initiatives. In addition, certain investment banks and venture capitalists also specialize in the wireless infrastructure space. Media Capital Advisors, RBC Daniels and RBC Capital Markets, Raymond James and Co. and Macquairie also watch the wireless ecosystem. Numerous research companies also cover specialized areas of the technology space, including ABI, IDC and Yankee Group, to name a few.

More from RCR Wireless News' January Special Edition Wireless Infrastructure: The Engine for Economic Recovery

Intel Corp. pledged $3.5 million to help create jobs for college graduates in high-growth industry sectors, including wireless infrastructure. The company is leading a new group called The Invest in America Alliance, which aims to “further anchor the nation's competitiveness on the global stage. It serves as the private sector's complement to existing state and federal job creation programs through long-term investment in industries and talent poised to produce the next breakthroughs in technology innovation,” according to a news release announcing the venture. Seventeen corporations have joined the alliance to date, committing to increase hiring in 2010, collectively adding 10,500 jobs for college graduates. Twenty-four venture capital firms have joined the alliance as well and other companies are expected to join later.

"Strong, enduring economies grow out of a culture of investment and a commitment to innovation," said Intel President and CEO Paul Otellini. "We simply must have a clear, consistent strategy to promote innovation, investment and start-up companies. There are things business can do, and ought to do, independent of what government achieves. It would be a long-term mistake to let our future scientists and engineers sit idle after graduation. Today's announcements are both an investment in the country's innovators and a signal to the global marketplace about America's commitment to innovation and future competitiveness."

The alliance has a two-pronged approach to investing in U.S. companies. First, Intel and 24 venture capital companies are promising to commit $3.5 billion to help create jobs “in current market segments and also in newer industries such as molecular diagnostics, bioinformatics, electric vehicle ecosystem and wireless infrastructure,” Intel said.

Secondly, Intel and 16 other technology companies have committed to hiring more college graduates. While the new jobs will largely be for those with engineering and computer science backgrounds, positions available also include financial analysis, marketing, management consulting, sales and other business skills, the company said.

"Many more college graduates will now be able to put their education to work thanks to these 17 companies. We hope this is just a start and welcome companies across all industries to join this open effort," said Richard Taylor, VP and director of Human Resources for Intel. "Many college graduates have been among the hardest hit by the economic downturn and providing them a place in the economy today is the best way to ensure America's innovation and competitiveness tomorrow."

Venture capitalists taking part in the alliance are Advanced Technology Ventures, Braemar Energy Ventures, Bridgescale Partners, Canaan Partners, DCM, Draper Fisher Jurvetson, Flywheel Ventures, Good Energies, Institutional Venture Partners, Investcorp Technology Partners, Khosla Ventures, Kleiner Perkins Caufield & Byers, Menlo Ventures, Mohr Davidow Ventures, New Enterprise Associates, North Bridge Venture Partners, QuestMark Partners, Sevin Rosen Funds, Storm Ventures, Telesoft Partners, Updata Partners, U.S. Venture Partners, Venrock and Walden International.

The companies that have pledged to increase their hiring in 2010 include Accenture, Adobe Systems Inc., Autodesk, Broadcom Corp., CDW LLC., Cisco, Dell, eBay, Inc., EMC Corp., GE, Google, Inc., HP, Liberty Mutual Group, Marvell Semiconductor Inc., Microsoft Corp. and Yahoo!.

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