Rapid deployment of next-generation 4G long term evolution (LTE (News - Alert)) networks in developed nations is giving wireless infrastructure equipment market a big boost. As a result, it is expected to increase by 8.3 percent this year to reach $45.5 billion, according to information and analytics firm IHS (News - Alert) iSuppli.
Data comes from the research firm’s special report on “Wireless Communications.”
The IHS report shows that the spending on infrastructure, considered a bellwether for gauging the overall prospects of the wireless industry, continues the strong 7.7-percent expansion of last year, when carrier expenditures amounted to $42.0 billion.
The study expects the growth to moderate somewhat during the next few years to the 3-percent range, with total carrier spending on infrastructure equipment reaching $50.6 billion by 2016.
“Growth this year is due to investments of many carriers in the United States, Japan and South Korea on 4G LTE technology deployments, supplemented by carriers in China, Europe, India and other regions of the world investing in 3.5G network upgrades,” said Jagdish Rebello, director for consumer and communications at IHS. “Carriers are making the investments on infrastructure in order to keep pace with growing data traffic, especially on the mobile side.”
Since voice revenue has flattened, the study indicates that the capability to accommodate data traffic is crucial for carriers, especially since business models are continually being developed by them to exploit such growth on their networks, while monetizing such opportunities.
Data revenue is the best bet for carriers to keep growing in both the developed world and the emerging economies, according to IHS.
The IHS Wireless Communications report shows that data revenues now make up somewhere between 25 percent to 35 percent of carriers’ total service revenue, with the proportion expected to reach 50 percent by 2016 for many carriers in Europe, Australia, South Korea, Japan and North America.
Furthermore, the report suggests that carriers must successfully develop and execute on their data business models because failure to do so will result in carriers delaying the deployment of next-generation networking technologies, aggravating the congestion of mobile networks and contributing to a lower-quality mobile broadband experience for the consumer.
While the bulk of carrier spending this year will continue to be on older 3.5G technologies, equivalent to some 34.4 billion and flat from $34.3 billion in 2011, the spending on 4G is up a remarkable 132 percent this year to $8.6 billion.
Per IHS’ report, 4G expenditure is projected to take majority share starting in 2013.
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Edited by Braden Becker