The future of telecom operator infrastructure and software majors such as Ericsson, Nokia, Huawei, Cisco, HPE, IBM, Oracle and ZTE will not be bleak considering the fact that mobile operators are still looking for enhancing coverage and innovation.
“Though most LTE markets are saturated and most operators deployed nationwide coverage, there is still room to grow,” said Nick Marshall, research director at ABI Research.
ABI Research expects LTE networks will be the backbone of broadband connectivity for many years to come. Gigabit LTE provides a major improvement and lays the foundation for 5G mobile.
IHS Markit said worldwide mobile infrastructure revenue totaled $43 billion, falling 10 percent from 2015’s $48 billion.
Difference in opinion?
Last week, Stephane Teral, senior research director and advisor, mobile infrastructure and carrier economics at IHS Markit, predicted that LTE market will decline at 12.4 percent CAGR from 2016 to 2021, sinking to $12 billion from its peak of $25.9 billion in 2015.
IHS Markit said the early 5G rollouts won’t be enough to push the overall telecom infrastructure market back into growth territory, though 5G mobile infrastructure is projected to be a multi-billion-dollar market worldwide by 2021.
New business
At the Mobile World Congress 2017, Vodafone and Huawei demonstrated fibre-based 10 Gbit/s speed. This ultra broadband (UBB) technology can be applied to multiple services, such as ultra high definition (UHD) 8K videos, big data downloading, virtual reality (VR) and 3D, augmented reality (AR), remote healthcare, 360º television, and online gaming.
Nick Marshall said that the number of 4G LTE subscribers will exceed four billion during 2022 from two billion in early 2017.
The substantial growth in 4G subscriber base means that more than one out of two people globally will be using an LTE network by 2022.
ALSO READ: ABI Research report on LTE deployments
ABI Research said that nationwide 4G deployments have nearly completed in most markets across the world. Gigabit LTE networks are beginning to appear offering up to 1Gbps download speeds to mobile Internet users.
Telstra’s network in Australia offered Gigabit LTE speed this month. ABI Research expects that there will be more than 15 mobile operators offering Gigabit speed services to their subscribers by the end of 2017. “This is a significant development, and one that will lead to the birth of new use cases from the increase in data speed available to end users,” Nick Marshall said.
LTE everywhere
IHS Markit says there were 581 commercial LTE networks launched — indicating that LTE will decline in 2017 as a result of diminishing roll-outs.
ABI Research said that total mobile traffic will be increasing to 522 Exabytes in 2022 from 109 Exabytes in 2016. An average user consumes 1.2GB per month today and will consume more than 5.7GB per month during 2022.
LTE is and will remain dominant throughout the forecast period. LTE carries 67 percent of total mobile traffic today, increasing to 82 percent during 2022.
5G will carry 13 percent of total mobile data.
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ARPU challenges telecoms
Average Revenue per User per month (ARPU) in the U.S. will decrease to less than $35 during 2022 from approximately $43 today. Network operator’s capital expenditure (Capex) will decrease until 2019, after which 5G deployments will ramp up.
Both 2G and 3G networks are entering the second year of double digit subscriber decline.
Several telecom operators are not making significant investment in the upgrade of their 2G and 3G networks. Most of the mobile operators are consolidating infrastructure and combining their 2G or 3G networks with 4G.
Some upgrades will prepare the ground for 5G as many technology vendors start to offer 5G-ready infrastructure.
Revenue boosters
Dell’Oro Group said that the service provider (SP) router and carrier ethernet switch (CES) market reached over $13 billion in 2016 with SP core router revenues breaking the revenue record set in 2008.
“Despite lackluster spending trends by telecom operators, demand from cloud providers drove the market for SP Router and CES solutions.
“Demand for 100 GE ports in core networks has propelled the core router market to surpass revenue records set in 2008. In China, specifically, 100 GE demand surged in 2016 as operators in the country built out backbone and data center interconnect networks,” said Alam Tamboli, senior analyst at Dell’Oro Group.
Two technology vendors benefitted from the core router market – Huawei Technologies and Juniper Networks. Huawei was the biggest technology winner in China. Outside of China, Juniper Networks did very well with cloud providers, allowing it to gain market share against Huawei and maintain a second-place ranking.
Vodafone Spain in January 2017 said that it would upgrade its hybrid fiber-coaxial (HFC) network to offer symmetrical speeds, higher than 1 Gbit/s in both upstream and downstream directions. In addition to updating the existing network to a DOCSIS 3.1 one, Vodafone Span plans to use a new distributed architecture, based on which fibers are further moved downward to optical sites and greater bandwidths are provided for users.
Andorra Telecom selected Huawei for the FTTH swap project to provide high speed Internet access service to end users by upgrading the existing fiber to the home (FTTH) network. The new deployment will start in March, 2017 and will finish around January 2018.
China Telecom Wuxi Branch (Wuxi Telecom) has completed upgrade from a traditional data center to a cloud-based multi-tenant data center — using Huawei’s CloudFabric Data Center Network Solution.
Globe Telecom has selected NEC Corporation and Netcracker Technology to support its digital transformation initiative and lay the foundation for next-generation infrastructure, including virtualization.
“Our customers expect us to offer the most innovative digital services in the market and deliver those services reliably and consistently. As such, we continue to invest in cutting-edge technology that will allow seamless customer experience,” said Pebbles Sy-Manalang, chief information officer (CIO) at Globe.
The telecom research report from ABI Research indicates that there is room for growth in investment by telecom operators. Some of the above charts from global telecom operators indicate that they are on the investment drive to boost ARPU and improve customer experience.
Baburajan K
editor@telecomlead.com
