Infonetics Research: LTE Leadership in Wireless Infrastructure, IMS, VoLTE, and CAPEX

LTE and Wireless Infrastructure:

Infonetics Research reports that LTE spending is up 128% from the year-ago first quarter, and the number of mobile operators committing to LTE continues to increase rapidly. The prestigious market research firm forecasts the LTE equipment market to grow to $17.5 billion in 2016.   In its 2G, 3G, 4G (LTE and WiMAX) Infrastructure and Subscribers report,” Infonetics states that the global 2G, 3G, and 4G equipment market decreased 14% to just under $10 billion in the first quarter of 2012 (1Q12) following an 8% increase the previous quarter.  That’s pretty rough stuff for a wireless infrastructure market that is already incredibly competitive (thanks to Huawei and ZTE).

“The overall mobile infrastructure market took a beating in the first quarter of 2012,” notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research. “We saw weak 2G and 3G activity across the board, exacerbated by China Mobile’s dramatic GSM pause on the heels of extraordinary shipment levels in the previous quarter. LTE and WIMAX equipment revenue also declined sequentially. Nonetheless, LTE spending is up 128% from the year-ago first quarter, and the number of mobile operators committing to LTE continues to increase rapidly. Infonetics forecasts the LTE equipment market to grow to $17.5 billion in 2016.”

2G, 3G, 4G MOBILE INFRASTRUCTURE MARKET HIGHLIGHTS

• From the year-ago first quarter, the overall 2G, 3G, and 4G infrastructure market, including LTE and WiMAX equipment, is down 8%
• One bright spot of the quarter is 3G mobile packet core network equipment (GGSNs, SGSNs, PDSNs), up 4% sequentially and up 5% from 1Q11, reflecting ongoing 3G expansion activity tied to 2G modernization
• 319 mobile operators have committed to LTE as of early May 2012, up from 285 the previous quarter, and 72 LTE operators have launched commercial services in 37 countries, according to the Global Mobile Suppliers Association (GSA)
• In 1Q12, Ericsson and Alcatel-Lucent are once again neck and neck in the race for global LTE revenue leadership, followed by Huawei
• Infonetics expects a spike in TD-SCDMA equipment spending this year due to China Mobile’s expanding TD-LTE trials aimed at helping it move quickly to 4G

LTE and IMS deployments:

In related research, Infonetics reports that LTE is the top driver for IMS deployments, according to an IMS operator survey the firm conducted.   In its new IMS Service Strategies, Product Features, and Vendor Leadership: Global Service Provider Survey, carriers with IP Multimedia (voice, video, data) Subsystem core equipment in their networks were interviewed to assess their needs and to analyze trends in the IMS market.

“For the first time ever, LTE is the top driver for IMS deployments in our annual IMS service provider survey,” notes Diane Myers, principal analyst for VoIP and IMS at Infonetics Research. “But while LTE may be the number-one driver, the reality is the majority of services running over IMS today are fixed-line VoIP. None of our survey respondents has yet deployed voice over LTE (VoLTE).”

Myers adds: “Ultimately, the longer-term inevitability of an all-IP mobile network is leading operators to IMS for other services first, even if VoLTE services are farther down the road.”

IMS Survey Highlights

• IMS networks continue to be deployed by fixed-line operators, mobile operators, and cable operators; 71% of Infonetics’ survey respondents have already deployed IMS and the rest are in the process of deploying IMS (a requirement for participating in the survey)
• Fixed-line VoIP service is the mainstay of IMS deployments, with 76% of respondents running residential voice over broadband, SIP trunking, or hosted business VoIP over IMS today, growing to 100% by 2014
• Mobile services are growing in importance: by 2014, 71% of respondent operators plan to offer RCS/e, more than half plan to offer VoLTE, and more or less a third will offer VoIP over 3G and mobile messaging
• Ericsson continues to be the leading IMS vendor in terms of equipment installed by respondent operators
• Huawei is a real standout in this year’s survey, growing its installed base every year among survey respondents and topping the vendor leadership list for pricing, total cost of ownership, product roadmap, financial stability, and reliability

South Korea and U.S. leading the VoLTE charge:

Infonetics Mobile VoIP Services and Subscribers report, tracks native mobile voice over IP (a.k.a. voice over Long Term Evolution, or VoLTE) and over-the-top (OTT) mVoIP service revenue, subscribers, and deployments by world region.

“The US and Asia, especially South Korea, are leading the voice over LTE charge, with Verizon Wireless, Metro PCS, SK Telecom and LG U+ all planning to launch VoLTE services this year,” reports Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research. “In fact, South Korea and Hong Kong have already successfully launched LTE data roaming and by August, SK Telecom expects to have the Samsung Galaxy S3, the first handset to support VoLTE on their network. This is all good news for VoLTE, of course, but to put it in perspective, even with the VoLTE market ramping quickly here on out, by 2016 VoLTE will make up only about 14% of global mobile VoIP revenue, while over-the-top mobile VoIP continues to make up the lion’s share by far.”

Co-author of the report Diane Myers, Infonetics Research’s principal analyst for VoIP and IMS, adds: “In the crowded OTT mobile VoIP market, Microsoft/Skype still dominates; however, while the tight integration of Skype with Windows Mobile 8 is important, the Windows Mobile operating system remains a distant player in the smartphone race. Meanwhile, independent OTT mVoIP providers like Google Voice, Fring, Line2, Nimbuzz, Talkonaut, ThruTu, and Truphone are working to differentiate from Skype and operator-driven OTT services such as T-Mobile’s Bobsled and Telefónica’s TU Me by making their service easier to use, lowering prices, integrating social networking, and adding video features. Still, with OTT mVoIP subscribers paying an average of only $14 per year, sustaining an OTT mobile VoIP service is extremely challenging, and most providers face daunting possibilities: go out of business or sell to a larger organization; or find a way to drive revenue beyond cheap calling.”

Mobile VoIP Market Highlights

• The number of global OTT mobile VoIP subscribers more than doubled from 2010 to 2011, to 98 million, with about 40% of the subscribers based in EMEA (Europe, the Middle East and Africa)
• With the first VoLTE services launching in late 2012, Infonetics expects the number of global VoLTE subscribers to reach about 300,000 this year
• AT&T plans to have VoLTE in place by 2013, and Clearwire announced that it will offer VoLTE when it launches its TD-LTE network by mid-2013

Telecom Capex spike expected in 2012; Asia is world’s largest spender:

Infonetics’  new report, Service Provider Capex, Revenue, and Capex-by-Equipment-Type, analyzes telecom operator revenue and capital expenditures (capex); forecasts capex by operator type, region, and telecom equipment segment; and provides insight into important telecom spending trends.  The firm expects a big CAPEX increase due to operators launching or expanding their LTE networks and modernizing their 3G mobile networks.

“We’re expecting a telecom capex hike in 2012 as operators around the world ramp their spending like crazy to launch LTE networks, modernize their mobile networks, and carry out national wireline broadband initiatives. Operators have to invest in their networks or they’ll disappear — competition is too cut-throat not to,” notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.

Téral adds: “High demand everywhere for telecom services, particularly mobile broadband, is fueling the latest investment cycle. The key capex contributors in 2012 will be Clearwire, Sprint, and T-Mobile USA in the US; NTT DoCoMo and Softbank Mobile in Japan; and KT, LGU+, and SK telecom in South Korea. China recently revealed a US$58 billion economic stimulus package to fund a fresh round of investment in telecom infrastructure. Meanwhile, Europe’s Big 5 have increased capital intensity by 2 percentage points for the first time in 5 years, right in the middle of the critical economic downturn! As for Latin America, operators already spiked, with capex there up 25% in 2011, led by América Móvil and Telefónica.”

More Carrier CAPEX Highlights

• Global telecom carrier capex grew 3% to $301 billion in 2011 from 2010
• Spending on every type of network equipment grew in 2011, with the exception of TDM voice, which continued its steep decline
• Asia Pacific was again the largest telecom carrier capex region, followed by EMEA (Europe, Middle East, Africa)
• Infonetics expects worldwide capex to spike in 2012, then level out in 2015 and 2016 at around the US$345 billion mark
• Wireless operators’ share of capex is forecast to grow from a quarter to nearly a third of global capex between 2012 and 2016, as the world continues to go mobile
• Telecom service provider revenue grew 6% to $1.8 trillion worldwide in 2011 over 2010
• Operators in Asia Pacific and EMEA are the largest revenue generators, each region with about a third of global revenue

To Purchase Infonetics Research Reports, Contact Sales:
N. America (West), Asia, Latin America: Larry Howard, [email protected], +1-408-583-3335
N. America (East), Texas, Midwest: Scott Coyne, [email protected], +1-408-583-3395
Europe, Middle East, Africa: George Stojsavljevic, [email protected], +44-755-488-1623
Japan, South Korea, China, Taiwan: http://www.infonetics.com/contact.asp

Acknowledgement:

The author graciously thanks Kim Peinado,  Infonetics Marketing Director, for providing information on the firm’s key research findings.  Kim is a true professional in a world full of amateur marketing and PR people!