LTE base stations shipping in (small) volumes, but not enough to sustain wireless infrastructure market

SINGAPORE: Spending on radio access infrastructure contracted in 2009. The market was down more than 5 percent YoY, resulting in only $49.5 billion in radio access equipment sales. The radio access market has been maturing for some time now, but the economic downturn did mean mobile cellular operators further trimmed their CAPEX budgets.

“The red pen was felt severely in South America, Eastern Europe, the Middle East and Western Europe,” says ABI Research’s vice president for forecasting, Jake Saunders.

“Despite the financial crisis emanating from North America, that region experienced a substantial 32 percent growth in radio access network spending. That was partly due to continued expansion in 3G coverage; but also due to carriers such as Verizon Wireless, AT&T and T-Mobile investing as they make their networks more ‘mobile broadband-robust’. As traffic from application and content downloads, web pages, and emails climbs, operators have felt it necessary not only to increase capacity in the core of their networks, but also in their radio networks.”

As carriers have tightened budgets, the incumbent radio access equipment vendors have experienced smaller equipment spending, and have also lost contracts to more competitively-priced vendors such as Huawei and ZTE. While Ericsson and Nokia-Siemens still hold the lead with 26 percent and 19 percent, respectively in the market for mobile cellular equipment and services, Huawei attracted 16.5 percent of sales in 2009 and ZTE, 9 percent.

“Alcatel-Lucent was eclipsed in 2Q 2009 by ZTE,” adds practice director Aditya Kaul. “It’s possible that Huawei could similarly eclipse Nokia-Siemens Networks before the end of 2010.”

LTE equipment began to ship in 2009, with more substantial ramp-ups expected in 2010 and 2011. At least 10 networks are expected to complete soft launches before the end of 2010. In base station counts, WiMAX is ahead of LTE until 2011, at which point LTE will overtake its sibling 4G technology.