ACG Research

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Monday, December 9, 2013

Q3 2013 Mobile Market Update

The mobile infrastructure market continues to be a bright spot for the telecom industry. According to the industry statistics (GSA), 109 LTE networks have launched commercially in the past 12 months for a total of 222 commercial networks in 83 countries. The GSA expects 260 commercial networks by the end of 2013. Additionally, 474 operators in 138 countries are investing in LTE, of which 421 have made commitments to deploy.

Additionally, mobile broadband is living up to growth expectations: subscriptions are now over two billion, and the number is expected to grow to 9.3 billion by 2019. Of these, there are currently 100M LTE subscribers, and this expected to grow to two billion in five years. This approximate 4X growth in subscribers will drive a 10X growth in network traffic.

Mobile infrastructure spending remained strong in Q3 2013, up 3% annually to $1.2B. This growth is because of the continued strength in LTE globally, although North America is starting to peak, but other geographies are starting their ramp. The Chinese wireless carriers are just beginning their deployments, and we should see extensive growth in the coming quarters. EMEA is awakening from its slumber is starting to show signs of life.

Mobile IP Backbone grew 4.3% Y-Y. Mobile IP Backhaul continued its robust growth at 21.7% Y-Y as additional backhaul capacity is needed to deal with the increase in data handled at existing base stations as well as for new small cell sites. The Mobile Packet Core segment was down double digits Y-Y, primarily because of delays in North America.

Small cells have been one of the major hubs of innovation in the past few years and did not disappoint this quarter: it grew 42% Y-Y, with growth across all segments. Femtocells increased 57% Y-Y; picocells increase 34% Y-Y; and micro/metrocells increased 31% Y-Y. SP WiFi remained strong at 40% Y-Y increase and IP backhaul grew 22% Y-Y.

Small cell adoption has not been a smooth curve as some carriers misjudged consumers’ price sensitivity early in the adoption cycle and the demand did not meet initial expectations for femtocells. ACG sees the most interest in unlicensed spectrum/WiFi offload because of the lower costs and increased flexibility. Other issues that will impact adoption rate are LTE transitions/hetnet operations, hotpsot 2.0, new backhaul technologies such as millimeter wave and free space optics (FSO), and power.

The capacity enabled by LTE is rapidly changing the face of information technology and enabling the always-on/connected society. The next wave will enable high-quality video entertainment, video communications, gaming, location services and commerce, not just voice calls and texting. The race to  provide these services and be more than dumb pipes is paramount to MNOs. This pressure is propelling technology vendors to develop the solutions to enable and control this complex environment.

For more information about ACG's mobility services, contact

David Dines

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