"Over the last 18 months, HSPA has finally started to deliver on the mobile broadband performance promise of 3G," says Patrick Donegan, Senior Analyst with Heavy Reading. "There is genuine excitement on the part of users at being able to get out their laptops across extensive urban and suburban areas and consistently get at least 1 Mbit/s throughput over the air."
However, the slower-than-expected adoption of 3G by network operators could result in a squeeze on the technology's lifespan if so-called 4G technologies are developed and rolled out as currently planned, Donegan adds. "Just as W-CDMA is finally starting to establish itself as the preferred global platform for mobile broadband services, it faces the prospect of being made redundant by an acceleration in the time to market of the 4G mobile WiMax and LTE standards," he says. "These technologies are designed to be deployed in much larger spectrum channel widths and offer better spectral efficiency, higher throughput, and lower latency than anything W-CDMA/HSPA can support."
Still, Donegan predicts that capital spending on 3G infrastructure products will continue to grow through 2011, while capex on GSM/EDGE gear will begin to decline this year, after remaining stagnant since 2005.
Key findings:
Global annual capex on W-CDMA/HSPA infrastructure will peak at about $19 billion in the 2010-2012 timeframe. For most GSM/EDGE or W-CDMA/HSPA operators, HSPA will be their primary, if not exclusive, platform for delivering mobile broadband services over the next three years.
The era of GSM/EDGE dominance is coming to a close, and the first shutdowns of GSM networks are likely to occur as early as 2012. The main indicator for this decline is that growth in emerging markets is starting to flatten out. While strong-growth markets such as India may well see higher GSM/EDGE capex in 2008 than in 2007, other operators in emerging markets are starting to either reduce total capex or shift capex into W-CDMA/HSPA.
The total 3GPP infrastructure market will decline slightly over the next five years, from $42.5 billion in 2008 to $38.5 billion in 2012. Increases in capex on W-CDMA/HSPA infrastructure will come at the expense of GSM/EDGE spending. Price cuts also will contribute to the revenue decline, as operators move to exploit opportunities to leverage still-greater economies of scale in their procurement, and as suppliers from China pursue aggressive pricing strategies to gain market share.
Ericsson and Huawei appear to be in the best position to capitalize on changes in the 3GPP infrastructure market. Huawei is clearly the vendor with the most market-share momentum in GSM and W-CDMA, and is likely to breach the 15 percent global share barrier in 2009. Ericsson has held its market share, and may even have gained. Motorola and Nortel are losing the most ground in the 3GPP infrastructure sector, but both have ambitions to regain their position with LTE.
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