Report: Mobile Operators' CapEx Spending to Rise 8.3 Percent, to $142 Billion, in 2009

Despite an economic downturn that is affecting subscription rates, mobile operators must continue to invest in innovation and infrastructure to meet rising demand for communications services, a technology research firm is reporting today.

 

Officials at ABI Research say the industry is seeing growth in the amount of traffic generated from services such as voice, messaging, e-mails, games, content downloads, mobile Internet access and video streaming.

 

According to Jake Saunders, vice president of ABI, the need to upgrade infrastructure and install new equipment remains, even with flattening subscriber growth and tougher credit conditions from financial institutions.

 

“Competitive pressures are putting the thumbscrews on carriers to introduce innovative applications and services such as music downloading, mobile TV and social networking,” Saunders said.

 

Part of what’s driving those services is a bustling developers’ market for mobile device applications.

 

According to ABI, the introduction of Apple’s iPhone 3G, Samsung’s Omnia, T-Mobile’s Android (News - Alert) G1 and RIM’s BlackBerry Bold – pictured right – have transformed the end user’s mobile Internet browsing experience, and led to a substantial rise to the average amount of data downloaded per user.

 

A type of application that many of those mobile users are increasingly interested in is based on satellite maps.

 

Mobile phones now share many capabilities of global positioning systems, and have led to applications such as one from Wales-based Sanoodi. The company’s SMap, an integrated and free route-recording and sharing application for BlackBerry, Windows Mobile and Nokia (News - Alert) phones or personal digital assistances that are GPS-equipped.

 

Sanoodi is a social Web site that allows its users to record, upload, and share outdoor activities on the Web. With SMap, routes can be uploaded live to the Sanoodi Web site as they are being recorded. Moreover, unlike competitors’ service, SMap can be used to record routes both online via the Internet and also offline.

 

In another example of demand for GPS innovation for mobile devices, as TMCnet reported, a Dutch digital maps provider this week released a new version of its database. Officials at Tele Atlas (News - Alert) say their new version of MultiNet took input from TomTom users in Europe and North America and upgraded its map change detection and validation processes.

 

Such efforts and upgrades to mobile capabilities bode well for carriers who are closely eyeing their bottom lines.

 

According to ABI, some operators may start cutting back on capital expenditures in order to boost operating margins and profits, as a way of showing investors that they’re responsible.

 

Yet others likely will make intelligent decisions about stretching their spending budgets.

 

The firm’s new report, titled “Mobile Operator Capital Expenditures Analysis,” says that global capital expenditure by carriers stood at $131 billion last year, and will jump 8.3 percent, to $142 billion, this year.

 

Much of that spending will go toward infrastructure costs, according to the firm.

 

“Base stations still account for the lion’s share of capex spending (49.5 percent), driven by coverage and infill base-station build-out, followed by backhaul (19.2 percent) and the core network (15.7 percent), including mobile switching centers and media gateways,” ABI says.