ACG Research

ACG Research
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Tuesday, May 26, 2015

1Q Worldwide Mobile Infrastructure Markets Driven by LTE

LTE-Advanced deployment is a major industry, voice over LTE activities and high interest in end-to-end VoLTE solutions is driving the mobility market
The Worldwide Mobile Infrastructure market decreased revenue in Q1 and year over year. The Q1 Total Worldwide Mobile Infrastructure market posted revenue of $87.4 billion. Although mobile broadband net sales were primarily driven by radio technologies, and specifically LTE, the market downturn is attributed to the Ericsson’s North America decline, as most operators have completed their LTE deployments. But it is anticipated that the fast-rising data traffic could eventually require further upgrades of U.S. wireless networks to LTE-Advanced, generating opportunities for vendors.
Mobile spending was flat in the quarter and is attributed to carriers in the phase of planning to prepare for new deployments and network upgrades. Current trials with the different forms of LTE could potentially slow down spending until MNOs are convinced of the added value they bring to the networks with carrier aggregation. 3G remains strong and continues to grow as developing economies upgrade and invest in this technology. Mobile infrastructure will continue to be a highly dynamic market for the next several years as vendors and carriers are getting ready to offer new technologies such as VoLTE, network function virtualization, small cells, Hotspot 2.0, millimeter wave backhaul and DAS. Vendors with a plurality of solutions will need to have solid strategies and execution plans in this demanding environment.
“It has been an interesting quarter as the LTE key revenues shifted from North America and EMEA to Asia, which is becoming a very vibrant market across all the mobile technologies because of the large deployments and tremendous demand for mobile data,” states Elias Aravantinos, principal analyst, ACG. “However, there is ongoing 5G preparation and services convergence trend across all leading operators. This trend will result in high-performance networks. Providers are trialing new LTE forms, NFV, and virtual services as well as addressing densification affecting the small cell market and creation of a new IP voice services that support VoWiFi and VoLTE as complementary services. This is expected to increase operators’ spending the coming years.”
  • Network innovations will facilitate bandwidth increases by expanding the capacity of the access network, reducing service providers’ costs, and creating new incentives for subscribers to stay on-net. For example, the benefits of LTE-Advanced include optimized heterogeneous networks with a mix of macro cells and small cells to improve coverage and reduce costs and use of multicarrier to support higher data rates.
  • LTE worldwide initiatives will remain strong by the end of 2015, driving the demand for mobile backhaul, evolved packet core, and edge routing solutions; however, there will be a decrease in the mobile backhaul business when LTE roll-outs end. In 1Q some vendors benefited from a second round of investments in LTE backhaul infrastructure to raise capacity for demand. LTE TDD is gaining traction, as the LTE-TDD mode with unpaired spectrum continues to develop in all growing regions, particularly in China. LTE-Advanced systems commercially launched in more than 30 countries, expected to double in 2015.
  • Market is expected to grow as operators start implementing their plans, upgrading networks because of mobile data access pressure and the LTE subs explosion. Online video will add to this data pressure because more than two-thirds of the global mobile data traffic will be video by 2017. VoLTE service and its growing demand will require, mainly in APAC and North America, more Small Cells for better coverage. Global machine to machine will triple its revenue growth mainly from international businesses.


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