Global spending on wireless infrastructure gear in 2011 is projected to rise by 7.7 percent to reach $43.2 billion, up from $40.1 billion in 2010. This compares to growth of 3.8 percent in 2010, and a decline of 7.2 percent during the recession year of 2009.
The year will represent a peak period for growth, with wireless infrastructure spending poised to expand by the largest rate until at least 2015, as presented in the figure below.
“In developed nations, wireless carriers are wrestling with the thorny issue of exploding data traffic on overloaded networks, brought about by the huge appetite among consumers for high-bandwidth mobile data services such as video and web browsing,” said Jagdish Rebello, Ph.D., senior director and principal analyst for communications and consumer electronics at IHS.
“This is spurring rising investments in equipment that can support high-speed data transmission, specifically gear that works with the 3G/3.5G and 4G standards.”
Carriers in Developed Regions Lead the Way
Many carriers in the United States, Canada, Europe, Australia, Japan and South Korea are taking a cautious approach in 2011, focusing on the purchase of equipment for currently dominant 3G/3.5G technologies in order to extend the life of their investments.
As carriers in the developed nations expand deployment of 4G during the coming years, an increasing portion of their total capital spending will be devoted to that next-generation technology, designed to support mobile wireless access at very high data transmission speeds.
By 2013, 4G networks will account for the largest portion of the wireless infrastructure market.
In most of the developing countries, carriers this year will maintain capital spending on infrastructure gear at approximately the same level as that seen in 2010.
A potential exception to flat capital spending in developing countries 2011 is India, where the carriers that won wireless spectrum auctions last year are believed to be investing in 3G networks this year.
Another exception is China, where wireless operators will slow down capital expenditures. Significant portions of the 3G network build-out in the country have been completed. Furthermore, China’s three main telecom providers also have announced reduced spending plans for 2011.
Infrastructure as Leading Indicator
Although spending on infrastructure represents only one component of overall capital expenditures by carriers, the metric is a closely watched indicator of the direction that the wireless telecommunications industry is headed.
The other components of wireless capital spending, aside from infrastructure, include expenditures on software and network upgrades, as well as spending on non-infrastructure equipment such as cables, plants and site procurements.
Total capital spending in 2011 by wireless carriers is anticipated to reach $134.6 billion, up 1.1 percent from $133.2 billion last year.