2 Comments

Summary:

Mobile operators are freaking out about the growth of mobile devices, mobile video and their shrinking ARPU. But a respected research group with plenty of carrier clients issued a report this week that essentially tells carriers to stop whining. They can afford to invest.

iStock_000000700084XSmall

Mobile operators worried about the coming data tsunami are freaking out left and right about the growth of mobile devices, mobile video and their shrinking ARPU. But Strategy Analytics, a respected research group with plenty of carrier clients issued a report this week that essentially says, “Stop whining, mobile data will require infrastructure investment, but y’all can afford it.”

Strategy analytics was a bit more diplomatic noting in its press release on the report, “New analysis from the Wireless Operator Strategies service of Strategy Analytics, … predicts that although the annual global investment required for mobile broadband network infrastructure will grow from $22 billion in 2011 to $48 billion in 2014, the capex available for mobile network investment will, in fact, be two to five times that level.”

The report translated annual traffic forecasts in petabytes to daily and peak period traffic for all mobile broadband applications, added 30 percent to handle unexpected demand and measured that traffic against the gear required to support it. Sue Rudd, director of service provider analysis concluded that, “The resulting capacity estimates are between 70 and 80 percent lower than the total daily traffic passing through the network – a source of leverage too often omitted from the discussion.”

Essentially, a zettabyte a year might sound like a lot, but when the analysts divide that by 365 days and then estimate how much of that will take place during the peak times that will result in actual network congestion, the math starts looking more manageable. The report estimates that carriers will be able to meet the demand for services while still maintaining the same level of capital expenditure as a percentage of revenue (it’s between 8 and 13 percent) that they have today. If this is true, perhaps operators such as 3 UK, that are offering unlimited service for data instead of caps, might be just fine, and those capping service might need to start justifying their pricing schemes — or their lack of investment.

  1. I thought the coming problem was going to be spectrum space, not infrastructure investment. If there will in fact be too little spectrum, then investment isn’t the issue, and I don’t see the point of Strategy Analytics’ report.

    1. Stacey Higginbotham Rich Thursday, June 9, 2011

      Rich, spectrum is essential, but carriers are also worried about a falling average revenue per user even as data use increases and taxes their networks. I explain that issue in this story http://gigaom.com/2009/07/12/what-will-carriers-do-when-the-data-gravy-train-derails/

Comments have been disabled for this post