Mobile infrastructure spending to rebound

Spending on wireless network infrastructure will rebound in the next couple of years led by the much-criticised 3G networks.

Research firm IDC has forecast that although spending on wireless equipment fell by 22 percent last year and will drop by a further 6 percent to 7 percent in 2003, continued demand for mobile solutions from businesses and consumers will eventually drive up investment.

IDC predicted that annual spending on wireless and mobile network infrastructure will grow from USD38.3 billion in 2002 to nearly USD49 billion in 2007. A lot of this spend, said IDC, will be on 3G networks, which have been dismissed in some quarters as expensive white elephants. However, IDC believes that 3G will deliver its originally envisaged benefits for network operators.

"The essential rationale for deployment of 3G networks -- gaining spectrum efficiencies, easing network capacity constraints, lowering operating costs, and expanding revenue opportunities through provisioning of data services – remains intact," said Shiv K. Bakhshi, research manager for IDC's wireless and mobile network infrastructure program.

Bakhshi added that the rising popularity of MMS and picture messaging, as well as the proliferation of public WLANs and hotspots, will encourage greater data consumption in a mobile environment, which will spur deployment of network infrastructure.

However, voice will still remain the killer app for many network operators, according to IDC. "Traditional voice services will attract a fair share of network infrastructure spending in both developed and developing markets. In developed economies, voice-related spending will be driven by the increasing salience of quality of service issues related to voice offerings; in developing economies, it will be driven by the massive pent-up demand for voice connectivity," said Bakhshi.

He also predicted that 2.5G mobile networks will enjoy a longer shelf life than originally argued by infrastructure suppliers.

© ENN