4G To Drive Wireless Infrastructure Spending Rebound

Carriers deploying LTE 4G networks is expected to spur global capital spending on wireless infrastructure in 2011 after two years of declines, according to iSuppli.
Global capital spending on wireless infrastructure equipment is expected to rise again in 2011 after two years of spending declines, with the eventual deployment of 4G networks, said research firm iSuppli Corp. Worldwide, expenditures are forecasted to reach $40.3 billion next year, up 6.7% from $37.8 billion in 2010, iSuppli said.

The downward trend began in 2009 when spending dropped 5.7% and is projected to continue through the remainder of 2010, for an additional decline of 2.3%, the firm said.

"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, in a statement. "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."

Approximately 30% of total wireless capital expenditures are from infrastructure spending and the remaining portion is divided among software upgrades, maintenance and capital costs on site procurement, according to iSuppli.

Most worldwide carriers are expected to choose Long Term Evolution (LTE) as they deploy 4G, and it will become the prevailing technology over WiMAX, which will become more of a niche 4G technology, iSuppli said. Already, Verizon Wireless has said it is planning to deploy LTE by the end of 2010, with AT&T and T-Mobile expected to follow in 2011. Around the world, other wireless carriers, including NTT DoCoMo and KDDi in Japan, have announced support for LTE, along with Vodafone and Orange in Europe.

"The transition in the developed world to 4G networks, designed to support wireless mobile access with very high data transmission speeds, comes in the wake of build-outs that are winding up for outgoing 3.5G networks," Rebello said. "While carriers are regulating capital expenditures this year to maximize mileage from their remaining 3.5G investments, the starting launch next year of 4G services, with their faster speeds, might help unclog the heavy data traffic now weighing down carrier networks."

Tiered pricing plans based on data access rates will likely be implemented by carriers launching 4G, iSuppli said. As a result, customers will be forced to pay higher access fees when using high-bandwidth services like mobile video or peer-to-peer video gaming, as data traffic in access networks becomes prioritized, the firm noted.

Wireless carriers in the rest of the developing world, including Latin America, China and India, will focus on continued investment in 3G network enhancements, iSuppli said.