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Mobile Service Provider Investment will Shift in 2015

As we look toward 2015, we'll see signs that the mobile service provider sector will start to shift its investment budget into new technologies. The 4G Americas organization says Software-Defined Networking (SDN) and Network Functions Virtualization (NFV) each offer an opportunity for expanded network flexibility and capacity, while also enabling the reduction of operating and capital expenses.

By utilizing more off-the-shelf bare metal hardware and open source-based software solutions, they're going to be in a much better position to revolutionize mobile networking infrastructure optimization.

According to the latest global market study by ABI Research, the total worldwide wireless network operator capital investment (CAPEX) budget will increase by 5.9 percent by the end of 2014 -- that's a slower rate than 2013.

The investment will reach $185.5 billion as large capital expenditure is expected in developing regions of Latin America, Africa, and Asia-Pacific.

ABI Research expects that radio access networks (RAN) and core networks will continue to represent significant portions of equipment spend.

The spending on macrocell radio access network (RAN) is expected to reach $37 billion by the end of 2014, while spending on small cell RAN will reach $2.1 billion. On the other hand, core mobile network infrastructure spending will continue to drop by 0.1 percent.

"In mature markets, a growing proportion of equipment spend is geared towards small cell and Wi-Fi hotspots installation, as mobile device usage in dense urban areas increases," said Lian Jye Su, research associate at ABI Research.

ABI believes that new equipment spend on microwave backhaul and in-building wireless networks will increase by 40 percent and 14 percent, respectively, by the end of 2014.

Meanwhile, ABI Research says that mobile service provider operating expenditure will continue to rise, but at a smaller rate compared to previous years.

In some cases, mobile network operators are also reducing their operating cost through tower outsourcing agreements. As an example, MTN Nigeria transferred its tower business to IHS and allowed them to have full control over 9,151 towers.

At the same time, Bharti Airtel sold 3,500 towers to Helios Towers, raising $2 billion in the sale. The outsourcing of tower maintenance allows operators to focus on their core businesses, while tower companies will be able to achieve economies of scale through the large number of towers they acquired.

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