WiMAX to lead $13bn capex boost in 2007-2012
Wi-Fi to be sidelined
Capex investment on pre-4G wireless systems will reach a cumulative total of $13bn by 2012 if new spectrum allocations, and technology roll-outs, stay on schedule. The main systems attracting this global spend will be 802.16e and its successor 802.16m, and LTE. However, while the latter will see a strong uptick in growth from the turn of the decade, it will not overtake WiMAX in capex terms until 2014.
If either or both technologies experience severe delays to their development and certification processes, and especially if new spectrum fails to materialize as quickly as promised in both mature and emerging economies, the level of spending could be reduced by as much as $3bn cumulatively between 2007 and 2012. A similar scale of upside is possible if global regulators act quickly and reform their processes earlier than currently seems likely, and if other systems such as Ultra Mobile Broadband and China FuTURE Network also come quickly to market.
These are key findings from Rethink Research's latest in-depth survey of wireless service providers worldwide, entitled 'The Road to 4G: operator deployment plans and vendor prospects 2007-2012'. This report is based on feedback from a survey of almost 400 providers worldwide, all of whom are planning to trial or deploy one or more '3.9G' technologies with the implementation to start before the beginning of 2013. The respondents range from tier-one converged telcos, wireline telcos and cellcos through major regional carriers and international ISPs, to broadcasters, broadband wireless start-ups, media players and major WISPs.
In a broader survey of the operator base, it was found that almost two-thirds of providers intend to commit to some form of 3.9G trial or deployment within the period, with the remaining third having no plans, or believing they can wait until after 2012. Within the base of 386 providers that do plan to invest in 3.9G in the study period, about 45 per cent will kick off their trials before 2011, or have even done so already.
Before the end of the decade, WiMAX takes the lion's share of this capex spend - including RAN and core infrastructure and associated software and services - because of its earlier availability, even in precertified form. It retains its capex lead throughout the period, even though this narrows with the acceleration of the LTE community's development plan, and the strong uptake of LTE by UMTS operators. In terms of numbers of deployments, LTE overtakes 802.16e in 2011, mainly driven by telco and cellco investments, although in many sectors - start-ups, WISPs, cablecos - WiMAX remains dominant throughout the period.
Although there has been market questioning of whether UMB (Qualcomm's OFDM/CDMA successor to EV-DO Revs A and B) will see the commercial light of day, this study found considerable interest in the technology among the CDMA community, and a belief that it would support competitive edge in terms of efficiency and multimedia performance. We believe it is highly likely that Verizon will commit to the technology - no doubt under very favorable terms and with the chance to shape its future directions - and this would send a strong signal to the rest of the market. So, while UMB plays mainly among CDMA cellcos and converged telcos, and some media players, we believe it will form part of the 3.9G picture, though with a lesser share of the total capex than EV-DO has in 3G.
China is aiming to create its own pre-4G platform in order to reduce its dependence on western IPR and vendors, and even export it to be part of international standards. The focus of this effort is the so-called FuTURE Network, which should become a reality early in 2008. Its future looks highly unstable, and although Chinese technologies will almost certainly become part of the wireless mainstream at the 4G stage, the report's findings are that the Chinese operators will trial other systems as well as FuTURE, and only adopt it if it genuinely outperforms LTE and WiMAX (government permitting). It also finds that there will be very limited interest outside China, except in a few smaller central and south-east Asian nations, and a few trials elsewhere, conducted for political as much as technical reasons.
Metro area Wi-Fi will be part of the 3.9G picture too, although its licence-exempt spectrum means its share of the capex will be small and it will mainly be used as an early foothold in new wireless markets, and then as an adjunct to LTE or WiMAX, rather than standalone. Its impact, then, except as a client-end and in-home technology, wanes after 2010 as the other networks start to mature, but it will remain a disruptive influence in the hands of some WISPs and in some regions where there has been little allocation of new spectrum.
In 2008-2010, the leading investors will be converged or wireline telcos, and the key regional drivers will be European and Asian roll-out of WiMAX and the start of LTE trials in western Europe. After 2010, the cellcos account for the largest single percentage of investment, and there is high regional growth from Europe as LTE starts to kick in, north America as the major carriers battle for a foothold in pre- 4G, and south Asia, especially Indian WiMAX.
The vendors are already jostling for position in 3.9G. On the infrastructure side, it will be hard for newcomers to make much impact against the wireless giants, although Cisco remains a possible disruptive factor. Ericsson is committed to making LTE dominant, Motorola and Samsung are the leading lights behind WiMAX, while others, such as Nortel, are aiming for a unified R&D platform that can be applied easily to all the options. While the vendor map may not change significantly, the same will not be true of other parts of the ecosystem. The move to all-IP will bring in new device makers, largely from the CE sector; new service models and applications from internet giants such as Google; and will create a major stand-off between the large chipmakers as Intel pushes the PC/internet view of the world, against the cellular heritage of Qualcomm and TI.
The report, 'The Road to 4G: operator deployment plans and vendor prospects 2007-2012', is published this week by Rethink Research Associates. For a summary or more details, please contact Linda Elisha on Linda@rethinkresearch.biz or +44 (0)1273 270270.
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