Recently, the Dell' (News - Alert)Oro Group brought out a report that had both good news and bad for the networking and telecommunications industries. While there was plenty to be happy about in the form of enhanced spending on one particular segment of the industry, there was more to be sad about in the decline in other markets that actually offset total growth in the industry.
The Dell'Oro report showed that revenue from LTE (News - Alert) was rapidly growing--they'd nearly tripled in the third quarter of 2012--but this in turn wasn't enough to help the industry as a whole, as the mobile radio access network (RAN) market saw an 11 percent drop for the quarter. This represents the fourth consecutive quarter of double-digit losses for the RAN market as a whole, and it only gets worse when the broader market is considered. Spending on RAN equipment, which had already begun to weaken back in the closing days of 2011, didn't see much improvement for 2012, thanks to a combination of technology shifts, an increased number of network modernization initiatives, and lower average selling prices.
In terms of RAN spending, according to the Dell'Oro study, Ericsson (News - Alert) remained first, followed by Nokia Siemens, who took over the number two slot from Alcatel-Lucent (News - Alert). Alcatel-Lucent, meanwhile, fell to third, tied for the slot with Huawei, who could both claim 15 percent of LTE RAN revenue shares.
However, even these dark clouds came with some silver linings, as detailed by Dell'Oro Group analyst Stefan Pongratz. Pongratz elaborated that, while spending on 2G and 3G was falling by the wayside in favor of LTE, it was becoming increasingly clear that the networks out there needed to provide better LTE access in a bid to differentiate their network offerings, and that in turn was likely to spur spending. The less they can offer in LTE performance now, Pongratz continued, the less likely they would be to get more subscribers in the face of those competitors.
The public hunger for bandwidth--be it fixed or mobile--is well known, and isn't likely to be going away any time soon. That's only going to fuel Pongratz's assessment that mobile operators are going to have to step up their offerings in bandwidth, or risk losing business to the first company that will. The expense of such operations, in the face of a shaky worldwide economy, isn't going to make that particular medicine go down any smoother, but those who are still paying their bills are going to demand more bandwidth. Those that fail to provide will be left behind, and they likely won't be getting too much support from the segment that isn't paying bills.
More LTE spending will likely be the order of the day in the coming months, so it will be well worth watching to see just how far it all goes.
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Edited by Brooke Neuman