IDG News Service - Mobile networks may not be getting upgraded as fast as some subscribers would like, but carrier spending on infrastructure is expected to rebound slightly this year after falling in 2009.
Revenue from sales of mobile radio and core network equipment fell 13% in the fourth quarter but will be roughly flat in 2010, a Dell'Oro Group analyst said Tuesday. On Monday, ABI Research estimated carriers will spend about 4% more this year on all network capital expenditures, after a 2.7% decline in 2009. Capital expenditures include components in addition to radio networks, such as backhaul connections to the wired Internet.
Mobile data usage continues to soar, and in some parts of the world, traffic jams on the way to the wireless Internet have focused new attention on the typically unglamorous networks behind sexy devices such as the iPhone. The proliferation of the popular Apple device has been blamed for dropped calls and poor data service on AT&T's network in San Francisco and New York City, which in turn has led to assurances by AT&T that it is building capacity as fast as it can.
ABI analyst Bhavya Khanna said mobile data usage more than doubled last year, but it was not matched by revenue growth because carriers continued offering unlimited data plans. The weak economy and a lack of available credit also caused some carriers to hold off on investments, Khanna said.
However, on a global basis, the picture is more complicated. What dragged down mobile equipment revenue in late 2009 was an ongoing drop in investment in 2G (second-generation) mobile networks, such as CDMA (Code Division Multiple Access) and GSM (Global System for Mobile Communications), Dell'Oro analyst Scott Siegler said. Carriers in India and China, especially, had made huge investments in those technologies before last year. Millions of first-time mobile users are now going onto those networks -- 12 million per month in India late last year -- but the carriers often can meet the growing demand with additional modules instead of entirely new base stations, he said.
Meanwhile, investment in 3G remains strong. Dell'Oro estimates it will grow 30% this year worldwide, driven both by huge new 3G buildouts in China and by network upgrades in more developed countries. For example, AT&T is upgrading its 3G network to HSPA 7.2, a form of High-Speed Packet Access technology with a theoretical top speed of 7.2Mbit/sec. T-Mobile is working on HSPA+, with a top speed of 21Mbit/sec.
LTE (Long-Term Evolution), which is expected to be the most-used 4G technology in the coming years, will also help network investments and equipment revenue ease back this year, Siegler said. But the now-emerging standard won't be a big piece of the pie for several years, he added. Dell'Oro believes LTE network equipment will be a $250 million market in 2010.
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