July 8, 2008
The burgeoning success of mobile data services is driving a turnaround in the struggling base station market, according to analyst figures released Tuesday.
With the number of mobile broadband subscribers worldwide reaching 100 million on more than 300 networks, mobile data traffic is set to increase 1088 per cent from 162PB (petabytes) in 2007 to 1,925PB in 2012, largely driven by a boom in web browsing and video.
Analysts at telecoms.com’s parent, Informa Telecoms & Media, forecast that global mobile traffic from YouTube and other mobile video streaming applications will increase by 5514 per cent by 2012. While the rise of user friendly and mobile broadband-capable devices such as the iPhone 3G can lead to a thirty fold increase in traffic per subscriber.
In fact, Informa predicts that 2011 will be the year when global mobile data traffic overtakes mobile voice traffic, which has always driven mobile network design, rollout and operation.
Principal analyst at Informa, Mike Roberts, said, “The mobile industry is still largely structured around its key product to date, narrowband voice, but that structure is breaking down fast due to the boom in mobile data traffic. The rapid transition from voice to data traffic will lead to a fundamental overhaul of mobile networks, as mobile operators and vendors shift their focus from voice to the mobile broadband internet. This in turn will help drive a wider overhaul of mobile business models and strategy.”
But while these forecasts spell good news for infrastructure vendors, the outlook for operators is not so good. Informa expects that operators will struggle to cope with the traffic boom because the popularity of flat rate tariffs means that mobile data revenues will not keep pace with traffic, and will have a direct impact on costs.
“We forecast that global mobile data revenues will only increase 77 per cent from 2007 to 2012, compared to a 1088 per cent increase in mobile data traffic over the same period,” said Roberts. “This will push current mobile network costs and architectures to the breaking point, and will lead to everything from network sharing and spectrum refarming to the launch of femtocells and next generation networks.”
This forecast echoes a comment made by the chief technical officer of Nokia Siemens Networks, Stefan Scholz, recently. Scholz said that with the internet as the world’s main source of innovation, the next hurdle the industry faces is an anticipated 100 fold increase in traffic in the next eight years, which has to be delivered at the lowest total cost of ownership. In the developed world, “HDTV and STBs are all delivering lots of traffic as are new, smarter devices and flat rate subscriptions,” he said, “the problem facing the industry is how to grow revenue as traffic grows – we need to optimise cost despite high capacity and low ARPU.”
Roberts believes this disconnect between soaring mobile data traffic and modestly increasing revenues explains why operators will keep a lid on network investment in the short term. “The mobile base station market will be flat for several years due to restrained operator investment in many regions and fierce price competition among vendors, but base station unit sales and revenues will rebound in 2011 as the mobile traffic boom forces operators to invest in new capacity,” he said.
But the traffic boom will also lead operators to increase investment in next generation networks such as WiMAX and LTE, which can support higher traffic loads at lower cost compared to traditional systems. “This will lead both WiMAX and LTE base station unit sales to overtake those of CDMA by 2012, as operators shift investment to next generation systems,” Roberts said.
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