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December 28, 2012

Infonetics Research: OTT, Free Services Necessitate Billion-Dollar Investment in Network Upgrade from Mobile Operators



By Madhubanti Rudra
TMCnet Contributor



At the end of 2012, it’s evident that the mobile industry is approaching saturation. The focus is more on data than voice, and over-the-top voice revenue is shifting away from mobile operators in this situation.

A recent report from market research firm Infonetics Research tends to forecast how the global mobile industry will take shape in the coming days.  

The report entitled, “2G, 3G, 4G (LTE) Services and Subscribers: Voice, SMS/MMS, and Broadband market size and forecasts report,” tracks mobile services revenue, mobile voice and data average revenue per user (ARPU), as well as mobile voice and broadband subscribers.

The piece pointed out that in some countries like Japan, the U.S. and the Netherlands, SMS usage is losing its popularity as a means of communication. In the U.K., users seem to be more in favor of free applications over mobile broadband that enable Internet browsing, e-mail and even video.

While these free services are good for the subscribers, network operators have to make extra investments in handling the surging traffic.

This has necessitated the upgrading of networks, even if it means investments into the billions of dollars.

“Service providers are spending billions of dollars to upgrade their networks to handle the skyrocketing traffic; if they don't, they face network outages and subscriber turnover. They're all looking for cost savings and efficiencies. But it comes down to subscribers either being willing to pay a fair price for the services provided or not,” noted principal analyst for mobile infrastructure and carrier economics at Infonetics Research, Stephane Teral (News - Alert).

The report revealed some interesting facts:

  • Mobile service revenue is increasing year-over-year, but the growth rate is decreasing, and in some cases not keeping pace with network operator capital expenditures (capex).
  • Mobile broadband services are growing fastest, expected to nearly double between 2012 and 2016.
  • Mobile broadband subscribers are expected to surpass contract voice subscribers by 2015, and with 45 percent of the world's 1.1 billion mobile broadband subscribers, Asia Pacific has been identified as the largest mobile broadband market.

 

Earlier in the year, Infonetics Research released excerpts from its Service Provider Capex, Revenue, and Capex by Equipment Type report, which tracks telecom operator revenue and capital expenditures (capex) by operator type, region and equipment segment, and provides insight into telecom spending trends.

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Edited by Braden Becker
 
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