SAN FRANCISCOGlobal spending on capital expenditures by wireless carriers is expected to decline in 2010 for the second consecutive year, with carriers remaining cautious as they recover from the recession, according to the latest forecast from iSuppli Corp.
Total capital spending on wireless communications this year will decrease to $120.6 billion, down 1.8 percent from 2009, according to iSuppli (El Segundo, Calif.). Spending in 2009 declined about 8.6 percent from 2008, the firm estimates.
ISuppli expects capital expenditures to start inching back toward growth in 2011, increasing to $126.9 billion by 2013, the firm said.
Jagdish Rebello, senior director and principal analyst for wireless research at iSuppli, said all major wireless carriers in developed nations will be "extremely cautious" with investments in 2010 and 2011. He added that iSuppli expects wireless subscribers in the U.S., Europe, Japan and South Korea to reduce spending on wireless voice and data communications due to global macroeconomic uncertainties, hurting carriers' revenue streams.
"In response, carriers will scale back their investments in technology upgrades," Rebello said through a statement.
Click on image to enlarge.
Instead of deploying 4G technologies such as Long-Term Evolution (LTE) and WiMAX, carriers in 2010 will focus on proliferating 3G/3.5G technologies to enhance the data rate capabilities of their cellular networks, according to Rebello. Mass deployment of LTE and WiMAX is not expected to occur before 2011, after carriers have recovered their investments in 3G, he said.
Meanwhile, carriers in developing countries mostly will continue to expand the reach of older 2.5G networks, allowing them to provide higher data transmission rates without making major investments in new infrastructure, according to iSuppli's forecast. The deployment of 3G is starting in a few developing countries, including India, Indonesia, Malaysia and Brazil, the firm said. In China, an aggressive 3G deployment campaign by Chinese carriers that began in 2009 is continuing in 2010, iSuppli said.
Spending by wireless carriers on software and network maintenance will make up the largest portion of capex investment in 2010, $60.9 billion, according to the forecast. Capital spending on wireless infrastructure equipment will reach $36.7 billion this year, while capital expenditures on non-infrastructure equipment will be about $23 billion, according to the forecast.
Source: iSuppli Corp. (click on image to enlarge).
While carriers have chosen to delay the deployment of 4G technologies, they will still need to wrestle with the increased data congestion caused mainly by the growing use of smartphones, iSuppli said. The carriers will turn to bandwidth-offloading solutions, such as femtocell base stations, which will be deployed on a large-scale basis for the first time beginning this year, according to iSuppli's forecast.
Rebello's latest report on the mobile infrastructure market is being offered for sale by iSuppli through the firm's website.