| HAMPTON, N.H. (Dec. 19, 2012) — According to TBR’s 3Q12 U.S. & Canada Mobile Operator Benchmark, LTE deployment, shared data plans and a shift toward connected devices will drive subscriber and revenue growth over the next two years. “Operators are starting to focus on connections rather than subscribers as the connected device market expands and opens up new revenue streams,” said Kate Price, practice manager in TBR’s Networking & Mobility Practice. |
Operators in the wireless industry are preparing for the new revenue streams and future growth with solutions in the security, automotive, healthcare and utilities sectors, and by launching shared data plans as AT&T and Verizon did in 3Q12. Connected device net additions in 3Q12 among the Tier 1 operators totaled 1.2 million, up from 1.1 million total net additions in 2Q12.
These plans promote connected device adoption by allowing the addition of devices directly to a user’s monthly bill. The plans will change the way operators report key metrics. Verizon already reports ARPA (average revenue per account) rather than the traditional ARPU.
This connection model is in its infant stage and will take years to manifest throughout the wireless industry. A less expensive price structure and customers better educated on the benefits and capabilities of multiple connected devices will accelerate future connected device growth.
The focus on LTE investment will continue throughout 2013, before industry attention turns to LTE-Advanced, small cell and Wi-Fi deployments aimed at boosting the LTE network’s effectiveness. Capex investment in the wireless industry is being driven primarily by network upgrades — specifically LTE upgrades. Prior to the launch of LTE, all mobile operators typically report a spike in capex that remains high throughout the first half of the deployment process before gradually declining. AT&T, Sprint and Verizon have spent a combined year-to-year increase of $1.3 billion on the LTE deployments.
The bulk of the Tier 1 LTE deployments will wrap up by the end of 2013, causing a deceleration in industry capex spend in 2014. However, operators will continue to invest in their networks to deploy LTE to rural markets, and boost coverage and capacity in high-traffic markets.
Small cell deployments are becoming a popular method to enhance coverage, and AT&T, Sprint and Verizon all announced plans to deploy them in high-traffic markets. Wi-Fi is another method used to reduce network congestion. AT&T currently has the largest Wi-Fi network, with more than 30,000 hotspots as of 3Q12.
LTE-Advanced will be the next technology to which operators migrate. The investment will begin with Verizon and AT&T in 2013 and will include the other Tier 1 and Tier 2 operators in 2014. LTE-Advanced is a software upgrade from the original LTE deployments and therefore requires a smaller investment than the initial LTE deployments.
Significant growth will likely take about two to three years, yet the possibilities are endless once the connected ecosystem is developed. Operators will be able to monetize this segment through various billion-dollar opportunities.
Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors. Serving a global clientele, TBR provides timely and accurate market research and business intelligence in a format that is uniquely tailored to clients’ needs. TBR analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.
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