Operators warned against LTE over-investment

Staff Writer
15 Feb 2011

The road to LTE growth is paved with promises of huge demand that will easily justify the significant investments that massive deployments will entail, but operators should still be cautious in their decisions as such demand may not materialize as early they think.

According to telecom and technology advisory firm Analysys Mason, mobile operators may already be able to meet the projected growth in data demand, at least over the short term, without plunking too much cash into LTE deployments.

By being more cautious in their investments, operators may even find themselves enjoying better revenue-per-byte rates and healthier margins than if they go ahead and invest generously in LTE deployments.

"There is a lot of exaggerated talk about mobile operators facing massively increasing pressure on their networks, and having to use every resource possible to make costs, revenue and traffic growth align," said Analysys Mason principal analyst Rupert Wood.

"The problem with the view that there is a huge impending wave of mobile data is that it does not correlate to measured traffic on mobile networks."

In Europe, for example, he said the usual claim that mobile traffic growth would double every year might not materialize. Analysys Mason's own research showed that mobile data traffic in Europe grew by 110% in 2009, but only by 35% in 2010. The prospect that growth this year would significantly exceed that of last year and mirror that of 2009 was almost non-existent.

A separate report from Juniper Research also stated that while operators worldwide had been making high-profile LTE announcements, some regions would not see significant take-up for at least the next three years. Western Europe was one example.

The hype surrounding an explosion in mobile data traffic demand could very well be the result of not having "an accurate sense of the relative size and dynamics of different types of mobile data traffic," Analysys Mason said.

For example, more than 90% of mobile broadband traffic now comes from PCs. While subscriber bases continued to grow, usage per subscriber is expected to either stagnate or dwindle. Also, while more subscribers were using their smartphones to access data services, these were done mostly via Wi-Fi and fixed broadband and not over cellular networks.

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