Wireless network expenditures set to increase in 2011 with 4G deployments

Capital spending on wireless infrastructure is set to rise in 2011 as global operators build out fourth-generation networks, according to iSuppli Corp. Following two years of less spending worldwide, operators are expected to spend a collective $40.3 billion on wireless network equipment next year, up 6.7% from 2009.
In the short term, capital spending is expected to continue to decline this year to $37.8 billion, a trend that began in 2009 as carriers slowed infrastructure spends in light of the global recession and as they tried to recoup their investments on 3G and 3.5G technologies. Capital spending on infrastructure accounts for about 30% of an operator’s total capital outlay, the research company said. While 2011 will be the first year to see an increase in capital spending, operators will continue to invest in their networks through 2014, spending more than $43 billion that year, iSuppli predicted.
“The upturn in 2011 signals renewed commitment within the wireless industry to move on expansion plans that had been delayed or put on hold because of the global recession,” said Dr. Jagdish Rebello, senior director and principal analyst for wireless research at iSuppli. “Starting in 2011, wireless carriers in industrialized countries will start to deploy 4G in order to attain faster speeds and to unclog the heavy data traffic generated by the exploding use of smart phones. This 4G-driven growth in capital spending will continue at least through 2014.”
WiMAX technology will remain a niche protocol, as most operators choose to deploy LTE networks, iSuppli predicted. Further, operators will begin to implement tiered data pricing in order to pay for their capital investments.
While Western Europe, Japan and the United States will push forward with 4G deployments, Latin America, China, India and the rest of the developing world will focus on expanding geographical coverage of their networks to improve wireless penetration. Some operators may choose to share networks in order to reduce their capital outlays, iSuppli said.