Telco equipment spending is posting double-digit gains, driven by purchases of network backbone equipment and data center solutions as the radio access equipment market levels off.
U.S. telecommunications network equipment spending rose 8.9% to $279.3 billion, according to the Telecommunication Industry Association‘s annual ICT market review and forecast. Network backbone infrastructure spending climbed 25.3%, driven by an increase of more than 100% in U.S. mobile data traffic.
Meanwhile, global spending on wireless coverage and capacity hardware grew just 11% last year to $50 billion, according to IHS Infonetics, and much of that growth was driven by LTE in China and heterogeneous network deployments in the United States. As U.S. carriers focus on network densification, total spending on radio access equipment is expected to decline.
“The coverage and capacity market is shifting from macrocell-based coverage to small cell-based capacity upgrades,” said Richard Webb, research director for mobile backhaul and small cells at IHS. “Because hetnet equipment is far less expensive than macrocell gear, large volumes will not be enough to offset a decline in macrocell revenue.”
IHS Infonetics expects the worldwide capacity and coverage market to decline in 2016 and then drop again in 2017 as the market shifts from coverage build-outs to hetnet-based capacity upgrades. The firm believes that by 2017, “5G” spending will already be underway in Japan and South Korea.
TIA also surveyed operators about their 5G plans, and found that only one-third of respondents expect their company to launch commercial service before 2021; the majority do not expect full commercial 5G service until after 2022.
