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Wireless Network Carriers Take Up the Slack on Infrastructure Spending

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Note -- this news article is more than a year old.

While the global economic outlook has swung from inventory doom and gloom to stock market euphoria and back to an overcast, "where's the demand " scenario, mobile carriers have their sights set on the mobile broadband traffic tidal wave that is rippling through their networks.

"Mobile network carriers are picking up the slack on infrastructure spending, increasing it up 8% quarter on quarter," says Jake Saunders, vice president for forecasting at ABI Research. "However, 2009 is still likely to close down 4% to 5% compared to 2008."

"There has been a noticeable shift in spending towards 3G and 3.5G equipment," Saunders continues. "GSM infrastructure is still selling off the shelves for emerging markets, but in developed markets mobile carriers are expanding their 3G footprints and upgrading existing infrastructure to support HSDPA/HSUPA and even HSPA+."

In Asia, the Chinese and Indian markets are likely to make marked contributions to equipment vendor revenues. Despite the fanfare of a third round of contract awards for TD-SCDMA, China Mobile will need to roll out TD-SCDMA for several years to build out the coverage and quality of service to meet end-user expectations and traffic build-up. In China, the lion's share of contracts have gone to Huawei, ZTE and Datang.

In India, while there has been a degree of scaremongering among politicians about contract awards, Indian mobile operators will not be keen to exclude Chinese vendors. While the Indian subscriber market is still one of the fastest growing, and largest, average revenue per user is one of the lowest in the world. Indian carriers therefore have a narrower margin to remain profitable, and yet India has some of the most intense competition within its borders, and 3G licensing has just been completed.

The YoY growth in installed base-stations will drop to 6.5% for 2009. However there are healthy signs that vendors such as Alcatel-Lucent, Ericsson, Nokia-Siemens, and others, are starting to ship 4G LTE equipment.

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