Telecom Lead India: Telecom service providers’ (SPs) revenue to grow 2 percent annually between 2012 and 2018.
Ovum says the dismal growth is due to carriers’ struggle with increased over-the-top (OTT) competition, end users’ more interest in buying devices and apps than services, and limited customer appetite for usage-sensitive billing.
The moderating revenues will have an impact on SPs’ capital expenditures (Capex).
According to a research by Signals & Systems Telecom, global 2G , 3G and 4G wireless infrastructure revenues stood at $45.9 billion in 2011. These revenues will increase 8 percent year on year reaching $49.7 billion by end of 2012, primarily driven by LTE investments. However, between 2012 and 2017, the market is expected to shrink to $48.6 billion.
Though the new wave of 4G macrocell Radio Access Network (RAN) and core network investments will not be able to compensate the overall declines in 2G and 3G equipment sales, operators are expected to significantly increase their spending in the evolving small cell and carrier Wi-Fi equipment market.
Small cell and Wi-Fi offload equipment will represent a market worth $5.4 billion in 2017. Consequently the small cell and Wi-Fi offload market segment is attracting considerable attention from both established vendors as well as startups which solely focus on the small cell market, said Signals & Systems Telecom.
Ovum suggests that SPs must continue to focus on cost control to offset relatively flat revenue growth over the next five years. Telecom operators have the potential to gain greater economies through their global vendors in terms of network rollout, network operations, network optimization, customer experience, and service quality management.
“Service providers will keep a tight rein on their capex budgets, but they do need to spend heavily on technology – both their customers and the competition demand this. What’s changing is that operators are more smartly attacking their operating expense (opex) budgets, which opens new opportunities for vendors,” said Matt Walker, principal network infrastructure analyst at Ovum.
Network/IT operations account on average for 18 percent of telco operating costs, of which 60 percent ($126 billion) is for spending internally, mostly using salaried staff.
To meet operators’ needs vendors will have to develop far more complex solutions for carriers than in the past. Carriers need help monetizing their networks and retaining customers, not just deploying the equipment.
