A better mousetrap kind of announcement that speaks directly to congestion and bandwidth issues faced by wireless operators, TPO is designed to better manage data by adapting traffic to accommodate dynamic network conditions. Cisco said TPO can potentially reduce the amount of traffic on a wireless network by up to 50%. The software solution also uses compression techniques to reduce the size of text-heavy HTTP traffic and optimize transmission control protocol (TCP) traffic. Optimizing traffic can reduce mobile backhaul costs.

“Cisco TPO is a valuable tool that does two very important things: It allows mobile operators to enhance the end-user experience while improving bandwidth utilization at the same time,” said Daryl Schoolar, principal analyst, wireless infrastructure at Current Analysis.

Cisco said wireless operators have been testing the new service, but it could not announce customer wins at this time.

The TPO advantage to consumer and business users is faster mobile video, Internet and cloud computing services, while the advantage to wireless operators is reducing traffic loads on their networks.

Ashraf Dahod, Cisco’s senior vice president and general manager of Cisco’s mobile Internet technology group, discussed TPO briefly in his keynote address at the 4G World conference in Chicago on Tuesday. Dahod was the founder and CEO of Starent Networks Corp., the mobile packet core specialist acquired by Cisco a year ago for $2.9 billion.

To increase revenue, Dahod said one way wireless operators can improve profitability is by reducing capex and opex by optimizing their networks through a combination of techniques including offload, optimizing video and adapting multimedia traffic (called transrating) – a message that would highlight the need for the TPO service, which had not yet been announced.

Andrew Capener, director of marketing for Cisco’s Starent Networks division, said TPO can reduce a 1.2 Mbps text-heavy mobile page to 250 kbps, which can be delivered faster and use much less bandwidth. “It’s one of those simple things that has a big impact. TPO can reduce HTTP and TCP traffic,” he said.

As for charges that the software solution could slow performance by overtaxing processors, Capener said Cisco’s TPO service was tested in a recent European Advanced Networking Test Center and showed zero performance loss.

In the old days, AT&T probably would have developed the inner-workings itself. But this partnership is about speed to market, and Jasper Wireless’s whole reason for existence is to “provide the platform, applications and design services needed to profitably connect and manage devices worldwide.”

By using the billing capabilities in Jasper’s software and AT&T’s wireless network, AT&T hopes to create a billing “relationship” with customers more quickly. In this multi-year agreement, Jasper brings its service platform to the table with the applications that help customers build, deploy and manage connected devices. AT&T is Jasper’s exclusive U.S. carrier for its wireless platform.

In a recent New York Times interview, Glenn Lurie, president, Emerging Devices and Resale, AT&T Mobility and Consumer Markets, acknowledged that while there’s a flurry of market activity around wireless access for gadgets, the market is in its infancy. I was relieved that Lurie sounded very clear that no one is clear what the business model looks like yet. Specifically he said: “You’re going to see a lot of people throw a lot of things out there and see what sticks.”

Maybe it will be a little bit like Apple’s iPhone apps. It seems every time I turn on the TV, I’m told that no matter what I might need, Apple’s iPhone has an app for that. Maybe wireless operators will want me to have all sorts of convenient wireless services.

Think Amazon Kindle. The AT&T partnership was announced the day after Amazon said it would release yet another Kindle in June. The Kindle DX is a large-screen (9.7 inch) version optimized for newspapers and magazines for $498. Now I am a recent Kindle 2 owner, and every time I download a book to my device in a matter of seconds, I think about the Amazon model of offering customers “free” wireless access. Since the Kindle’s launch in 2007, Amazon’s whisper-quiet partner has been Sprint, which runs the Whispernet (EVDO) network. Wispernet delivers e-books to me quickly and quietly. Someone pays for it of course, but for once, it’s not me.

The Amazon Kindle/Sprint Whispernet deal no doubt gets other operators’ attention. Sprint may provide the access, and other operators may want to go farther and get a more direct cut of the content. AT&T’s Lurie believes Jasper Wireless can help AT&T get into the wireless device market faster.

According to AT&T:

For some AT&T powered devices, Jasper Wireless’s applications will provide automated operational management capabilities, including custom device provisioning, instant activation, real-time diagnostic tools and detailed billing and usage reports – managed through a Jasper Wireless core software-as-a-service platform designed exclusively for M2M and consumer electronics communications.

By all means, companies should experiment, and wireless operators need to find a comfortable revenue stream, maybe even one that doesn’t make them mere transport providers. Lurie says AT&T wants to experiment with different models that could include charging customers for short-term or prepaid wireless access – both of which sound interesting.

Being a service-provider supporter, somewhere in all of the experimentation, I hope something lucrative sticks.

But wait, there’s a downside. Mobile broadband growth refers to increases in the number of users and the amount of data traffic. But the joy doesn’t spread to average revenue per user (ARPU), Ovum says. Instead wireless ARPU is expected to drop significantly during mobile broadband’s meteoric rise, with projected growth of only 44% of the rate of total users — a dilemma also faced by wireline network carriers.

Ovum expects 258 million users to access mobile broadband services through laptops by 2014, which translates into 1022% growth from 2008. Wireless operators expect similar growth for mobile broadband via handsets, but the existing user base is already much bigger: 158 million in 2008 growing to an estimated 1.8 billion in 2014.

The ARPU dilemma is enormous for carriers. ARPU will drop due to less revenue generated from emerging markets, increased competition for mobile broadband access and possible prepaid tariffs designed to drive up broadband adoption, Ovum says.

Whether in the air, on the ground, or along the ocean floor, providers have to come up with new ways to increase revenue in addition to transmitting bits. Even transferring 1000% more bits could still leave them as commodity players.

Ovum’s numbers again put the spotlight on value-added services as operators continue to look for a business model that will keep them in business in the digital age. Check out Mobile app stores deliver little direct revenue but are critical for ARPU for another view on the choices mobile operators face. Clearly, the answers aren’t obvious, but operators have some inherent advantages to over-the-top (OTT) content players. They just have to recognize them and take action in time.