ABI: Credit LTE for growing capex and patent royalties
LTE is helping keep the cash flowing through various parts of the mobile industry, including network infrastructure and smartphone patents, according to ABI Research.
The firm reports industry capital expenditures are picking up after a slow 2011, thank in large part to the switchover from LTE trials to commercial service in numerous markets. "Mobile capital expenditure is forecast to grow 9 percent to US$111.1 billion in 2012, supported by renewed investment in radio access network (RAN) infrastructure and in-building wireless access," said Jake Saunders, ABI's vice president of forecasting.
Asia Pacific is leading year-on-year capex growth, said ABI, noting for instance that China Mobile still spends 57 percent of its annual capex on radio network infrastructure, followed by 18 percent on its transmission and backbone network. Some of that capex is now being focused on LTE, as China Mobile has deployed 900 TD-LTE base-stations in six cities as part of a trial but plans to have 200,000 base stations by 2013, said ABI.
ABI expects overall capex in North America to slip 1.3 percent over the coming year. Europe, on the other hand, should see capex increase by 2013 as LTE rollouts pick up across the region
ABI also examined the impact of LTE on intellectual property royalties for smartphones. "The growing base of 3G handsets and acceleration of LTE handsets--with combined, but not quite additive, royalties for 2G, 3G, and 4G patents--will keep total mobile wireless royalties growing," according to the firm, which noted that annual handset shipments have risen from hundreds of millions to more than a billion.
The research firm said mobile wireless royalties for GSM, W-CDMA, and LTE smartphones fell just under $20 billion in 2011, but royalties will climb this year because more LTE smartphones are being sold. ABI expects 65 million LTE smartphones to sell in 2012. "Even though LTE handsets will only total 4 percent of the total handsets shipped in 2012, total royalty rates will be 14 percent higher," said Philip Solis, ABI research director.
ABI said Samsung and Panasonic will become power players in the intellectual-property rights realm thanks to their strength in LTE patents. Chinese companies such as Huawei and ZTE will also help will shift some of the patent power from Europe and the United States to Asia Pacific.
While companies such as Motorola (NYSE:MMI), which has strong patent positions for GSMA and W-CDMA, are not positioned well with regard to LTE IPR, Solis said Ericsson (NASDAQ:ERIC), Nokia, InterDigital, and Qualcomm (NASDAQ:QCOM) "will retain their patent position as the market shifts."
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