But how will rising shipments of such products affect the value chain?

Despite differences in their approaches, FCC 700 MHz spectrum auction winners AT&T and Verizon Wireless both plan to use their new bandwidth to deliver more options to consumers – including services for platforms other than mobile handsets. This is likely to drive increased demand for consumer-electronics devices capable of mobile communications, raising the question of how such functionality will be supported at the hardware level.

AT&T and Verizon Wireless won their respective spectrum in the 700 MHz auction, and both of them are set to use the same technology on that spectrum: Long Term Evolution (LTE).

The major difference between the two companies’ planned usage of the 700 MHz spectrum is that Verizon bid high enough to win the key C Block segment of the bandwidth. This subjects Verizon to open-access provisions, which compel it to support any mobile device that meets a minimal technical standard on its network. However, AT&T is not subject to the same requirements.

Given all of the debate regarding open access leading up to the auction, you would think that this would engender differences in how each operator will wield its newly acquired spectrum. However, since the anti-collusion restrictions were lifted, both operators have asserted that the open-access provisions, or lack thereof in AT&T’s case, will allow each to be able to deliver wider choices to consumers with respect to wireless devices, handset and non-handset alike.

If nothing else, regardless of how they go about doing it, both AT&T and Verizon Wireless recognize the importance of wirelessly connecting devices outside of the traditional handset space, both to address consumer demand and to increase subscriber numbers and average revenue per user (ARPU).

CELL PHONE OR PC?
But what does consumer electronics (CE) mobilization actually mean for other parts of the value chain such as the chipset and modem suppliers? The answer to that can be ascertained by answering another question: How will CE device manufacturers integrate Wireless Wide Area Networking (WWAN) communications? Will they do it the way cell phones do it, or the way PCs do it?

Figure 1 presents iSuppli’s forecast of initial commercial availability for various mobile broadband technologies by form factor.

Figure 1. Mobile broadband technology initial commercial availability by form factor.

Mobile handset designers employ discrete communications integrated circuits (ICs) that primarily provide baseband and radio frequency (RF)/power amplifier (PA) high-voltage discrete business functionality in either a multichip or single-chip architecture. They then design these parts directly into the main printed circuit board. In contrast, PCs use self-contained modem modules. Designers use such modules either as external modems accessible through a PCMCIA or USB slot, or an embedded module modem designed into the PC itself.

This essentially gives CE device OEMs three options:

• Discrete chips
• Embedded modules
• External modems

Discrete chips and embedded modules represent value-add for OEMs, allowing them to tap into the existing mobile broadband market. The third option is a peripheral support capability that does not require either extra investment, and doesn’t yield additional opportunity for the OEM. However, for the mobile broadband modem suppliers, either of the latter two options represents a greater revenue opportunity.

Figure 2. WWAN modem shipment forecast by form factor.

EMBEDDED VS. EXTERNAL
Wireless chipset suppliers really don’t care which option is chosen; they simply get to enjoy a new market with no major changes to the existing chips that they already sell to handset OEMs. This will help propel global shipments of WWAN external modems and embedded modules to rise to 103.3 million units by 2012, up by more than a factor of seven from 13.8 million in 2007. (See Figure 2.)

iSuppli believes that since most CE OEMs are less experienced with respect to integrating WWAN connectivity, they will opt for embedded modules as opposed to discrete chips or external modules when mobilizing their devices.

Based on the usage, inherent capabilities and form factors of most CE devices, the external modem route is impractical and requires too much user intervention. While discrete chips might offer greater design flexibility and even some per unit cost savings, overall design costs, required design expertise and the current royalty structure all indicate that the embedded module will be the solution of choice for most CE OEMs.

Sideco is a senior analyst for wireless communications at
iSuppli Corporation, in El Segundo, Calif.