While technology, in the form of smartphones, tablets and other new devices, has undoubtedly been a driver of change in the mobile industry, the take-away from Barcelona’s annual tech-fest that is the GSMA’s Mobile World Congress, has too often been that networks are struggling to continue delivering profitable services while managing the challenges wrought by increasingly data-hungry users.

In recent years the dominant question at the show has been how to reconcile the impact of massive advances in device technology with the wider, often network-related challenges facing the mobile industry, such as how to manage data traffic growth, reverse flat or declining revenues, and address competition from new over-the-top providers.

The economic backdrop to this year’s event provided network equipment vendors with scant cause for optimism. Most of the major suppliers reported flat or declining revenues from network equipment sales in the latter part of 2011 compared with 2010, with reduced operator spending attributed variously to fewer new network deployments, the impact of economic uncertainty, and recent political unrest in key markets. The knock-on effect of the flat market conditions has hit vendors in other parts of the value chain such as suppliers of test equipment.

All the more surprising then, that this year’s MWC should have apparently generated a more positive response than any in recent memory. Insofar as it is possible to encapsulate the mood of 65,000 or so attendees, those heading for home last week appeared markedly upbeat. Coming away from the event vendors appeared to be of one mind; business had been brisk and the number of substantive leads generated during the four days had exceeded previous years.

From a networks perspective the story of the week was the proposed introduction of new small cell architectures. As the macro network model appears an increasingly inefficient means of providing dense urban coverage or of extending services into remote, rural locations, the case for this new paradigm is a compelling one.

With suppliers placing huge store by the anticipated adoption of small cells it’s tempting to overplay their likely impact on revenues in the short term. Operator trials of these new products are just getting under way this year, and the first commercial offerings won’t be available before 2013, with volume production only following some time later if the technology proves successful.

Vendors are broadly agreed that integrated wifi will be an essential element in any small cell strategy, although there is little consensus when it comes to the choice of backhaul technology. Differentiation meanwhile is building around the various deployment strategies, and the management and co-ordination of small cell deployments in the macro network environment. And while the large OEMs are stressing the importance of end-to-end capabilities, opportunities still exist for smaller providers from small cell developers to integrated software, network optimization and backhaul suppliers.

At the same time, technical solutions to the problem of squeezing extra capacity from HSPA were widely touted in Barcelona, both by the major network equipment providers and by specialist companies in areas such as network design, optimization and traffic management, antenna systems, test and measurement, and core networks.

Even so, much of the activity sustaining the infrastructure business today appears to come from the areas that don’t necessarily make their way into press releases. At their briefing during MWC12, NSN made a point of highlighting GSM developments, while Ericsson stressed the high level of HSPA investment.

The anticipated continuing demand from mobile operators for additional capacity on existing networks may be part of the explanation for the vendors’ relatively buoyant mood, and the stream of equipment and rollout business coming off the back of HSPA expansion work with existing clients appears to have offset some of the impact on equipment sales.

Also buoying up expectations is the anticipated wider deployment of LTE, although in the wake of 3G the shift of focus from Europe to early adopter markets such as North America, Japan and South Korea hadn’t escaped the notice of many in Barcelona. Europe now looks increasingly like the LTE laggard as mobile operators in the region focus on filling existing capacity in their HSPA networks, and progress on auctioning new spectrum, particularly in the highly-valued 800MHz band, remains slow and uncoordinated.

Regional disparities aside, the general mood at MWC12 seemed to be that the mobile industry is moving in a positive direction. In terms of infrastructure, efforts to set out a technology path that goes further to meeting future demand appear promising, but mobile operators will need to be convinced before making radical changes to their networks.


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