Mobile operators are ramping up network spending in 2011, but face the prospect of costs exceeding revenues within the next four years.
ABI Research predicts global mobile network capex will grow 5% to $119 billion (€81 billion) in 2011, as carriers seek to boost coverage in buildings and increase data speeds in current and future networks. Just over half of the investment (56%) is earmarked for RAN upgrades and replacements, while core network spending is on the rise and likely to hit $12 billion this year.
“Many operators are leaning towards small cell deployments (microcells, picocells and femtocells) to fill dead zones and boost coverage inside buildings. However operators are also still investing in improving the downlink and uplink performance of their networks,” ABI’s forecasting vice president Jake Saunders notes.
While the need for investment is clear, rival research firm Juniper last week warned the expenditure could become a double-edged sword due to flat or falling revenues.
The declines could result in a “nightmare scenario” where costs exceed income within four years if operators don’t act to optimize revenue streams the firm’s analysts say.