Wireless Infrastructure Spending to Rise in 2011 as 4G Deployment Starts

Wednesday 28th July 2010 - 18:46

Following two years of declining expenditures, global capital spending on wireless infrastructure equipment is set to return to growth in 2011 as carriers in the developed world start deploying next-generation 4G networks, according to iSuppli.

The research group says that capital spending on wireless infrastructure throughout the world is projected to reach $40.3 billion in 2011, up 6.7 percent from $37.8 billion in 2010.

This will reverse the downward trend that first occurred in 2009 and is expected to continue this year. Expenditures dipped 5.7 percent in 2009, and in 2010 will tumble by an additional 2.3 percent to $37.8 billion.

“The upturn in 2011 signals renewed commitment within the wireless industry to move on expansion plans that had been delayed or put on hold because of the global recession,” said Dr. Jagdish Rebello, senior director and principal analyst for wireless research at iSuppli. “Starting in 2011, wireless carriers in industrialized countries will start to deploy 4G in order to attain faster speeds and to unclog the heavy data traffic generated by the exploding use of smart phones. This 4G-driven growth in capital spending will continue at least through 2014.”

According to iSuppli, carriers the developed world in 2011 will start to deploy 4G, with most expected to choose Long Term Evolution (LTE). Over the next decade, LTE will become the dominant technology, while WiMAX will be relegated to the status of a niche 4G technology, iSuppli believes.

Already, a number of wireless carriers have announced support for LTE, including NTT DoCoMo and KDDI in Japan, as well as Vodafone and Orange in Europe. In the United States, Verizon Wireless has announced it will roll out LTE by the end of this year, with AT&T and T-Mobile expected to follow suit in 2011.

Overall, carriers will work to establish viable business models to achieve greater revenue growth in light of the capital expenditures needed for network upgrades, iSuppli believes. This means that in all likelihood, carriers launching 4G will implement tiered pricing plans based on data access rates. As a result, data traffic in access networks will be prioritized, and customers will be required to pay higher access fees when using high-bandwidth services like mobile video or peer-to-peer mobile video gaming.

Rebello notes that while wireless carriers in Japan, the United States and Western Europe contemplate launching 4G services in 2011, their counterparts in the developing world will continue to invest in 3G network enhancements.

"For Latin America, China, India and the rest of the developing world—where wireless penetration has yet to extend to many rural areas—4G is not considered a feasible proposition at this point. Instead, carriers will focus on expanding the geographical coverage of their networks, or seek network-sharing agreements with infrastructure providers to help reduce total capital outlay," Rebello siad.

Related articles
T-Mobile HSPA+ Network to Deliver Broadest Reach of 4G Speeds in U.S.
Verizon to Build 4G LTE Network in Rural America
AIRCOM: LTE Not the Only Option for Mobile Operators Today
ABI Research: 2012 Will Be a “Bellwether” Year for 4G

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