Strategy Analytics challenges mobile broadband skeptics with new capacity and CAPEX forecasts

BOSTON, USA: Mobile broadband service providers are facing the challenges of geometric growth in traffic and linear growth in revenues. In December 2010, a report commissioned by four of Europe's biggest operators - Deutsche Telekom, France Telecom, Telecom Italia and Telefonica - questioned the ability of operators to fund the required incremental capacity for 3G/LTE mobile networks.

New analysis from the Wireless Operator Strategies service of Strategy Analytics, challenges this finding and predicts that although the annual global investment required for Mobile Broadband network infrastructure will grow from $22 Billion in 2011 to $48 Billion in 2014, the CAPEX available for Mobile Network Investment will, in fact, be two to five times that level.

This new analysis, “Capacity and CAPEX Required for Mobile Broadband thru 2014: Is there a CAPEX Funding Gap?” translates annual traffic forecasts in Petabytes (PB) to daily and peak period traffic for all Mobile Broadband applications, including messaging, voice, music, video, gaming and browsing. This includes global and regional projections for Western Europe, Central and Eastern Europe, North America, Central and Latin America and Asia Pacific.

“Based on proven network operator methodology, estimates were made of the capacity that each application would require at the peak period of the day, i.e., when the network is most congested. Thirty percent additional ‘headroom’ was added to this estimate, allowing for unpredictable fluctuations,” noted Sue Rudd, Director, Service Provider Analysis. “The resulting capacity estimates are between 70 and 80 percent lower than the total daily traffic passing through the network - a source of leverage too often omitted from the discussion.”

Rudd continued, “According to Strategy Analytics, capacity requirements are thus significantly lower than previous projections, meaning that in reality, Mobile Operators will have sufficient capital to meet the growth in demand.”

David Kerr, senior VP of the Strategy Analytics Global Wireless Practice, added: “Regional investment requirements vary significantly. The Asia Pacific Region will require twice the investment of either North America or Western Europe. Strategy Analytics projects, however, that Mobile Operators will have sufficient revenues to fund the required level of investment without exceeding their traditional CAPEX to revenue percentages of between 8 and 13 percent.”