Carrier spending on mobile core networks fell 13 percent in 2011 compared with 2010, according to a new report from ABI Research.
Based on information from network equipment vendors, the report found operator spending for mobile core networks fell from $24.6 billion in 2010 to $21.4 billion in 2011. The overall drop in 2011 came despite increased carrier investment in LTE networks. The drop may be explained by how carriers have chosen to upgrade their core networks, according to ABI.
"Thanks to well-planned architectural evolutions from 3G to 4G and earlier operator investments to make their networks 4G-ready, most operators have been able to simply upgrade their existing core networks to launch 4G services, instead of replacing all of the core network equipment," said ABI analyst Aditya Kaul.
Despite the drop, some vendors managed to increase their network sales, thanks in large part to LTE upgrades. According to ABI, Ericsson (NASDAQ:ERIC) and Nokia Siemens Networks lead the global core network market, with the two accounting for nearly half of all core network revenue.
Current Analysis analyst Peter Jarich said he was not that surprised by ABI's report and that many pieces of core network equipment are multi-standard products that are easily upgradable. Yet he said that does not tell the entire story. "I think the other interesting part we need to look at is, is this an early function of early days of the network vs. where capacity is?" he told FierceWireless. He said as capacity on LTE networks ramp up, he expects spending for core networks to increase as well.
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