MNOs will focus on users and costs in 2012
As operators in highly competitive, developed markets continue to invest in mobile broadband networks during 2012, we expect them to focus on two key areas for the following year: technologies critical to maintaining a high user experience and initiatives providing additional profit growth opportunities while reducing costs. Key areas for network investments include backhaul, network sharing and traffic optimization.
As LTE starts to gain mainstream acceptance, operators will continue to invest in EPC and IMS to support VoLTE, while rollouts of LTE in larger regions will accelerate. Planning and deployment of LTE networks will increase in 2012, generating growth for both major infrastructure vendors and specialist companies providing planning and testing expertise for these early networks. Network sharing will also gain traction as a way for operators to save costs and focus on core operational functions such as customer or brand management. This may well limit infrastructure revenues for network vendors but will also provide them with managed services opportunities.
Coverage will become a major issue in LTE, especially in markets where operators only have access to high frequency spectrum at 2.6GHz. Although LTE small cells are not yet deployed, 2012 is expected to be a pivotal year for the emergence of LTE femtocells. However, the wide scale deployment of LTE small cells for capacity improvements is not likely during 2012 due to several outstanding business and technical issues. Small cell backhaul in particular is an area lacking market approved solutions as operators are currently investing primarily in LTE coverage. These early adopters will want to see some level of payback from LTE services before investing in small cells for network capacity.
Moreover, small cell backhaul will be subject to R&D spend from vendors in order to provide an roadmap to mobile operators that may want to evolve early small cell deployments to more advanced networks, specifically with baseband pooling. Although fiber is currently necessary for front haul (the link between baseband and the radio remote unit in base stations called CPRI), we expect vendors to invest in optimizing CPRI and perhaps even research whether it’s possible to transport CPRI over microwave.
Traffic optimization for video is becoming a hot topic across the industry, with content providers, CDNs vendors and mobile operators all debating different options for delivering mobile content more efficiently. However, tier-1 groups can be expected to prefer to own their own CDN/caching infrastructure, leading to a surge in CDN vendor revenues in 2012. The London Olympics will be a major event showcasing the success or failure of these technologies, especially due to the presence of several high-profile tier-1 operators in the UK market.
Dimitris Mavrakis is a principal analyst with Informa Telecoms & Media’s networks team.