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September 18, 2006

ABI: CAPEX for WCDMA Will Overtake GSM by 2012

In a new report out today, high-tech industry analyst firm ABI Research predicts that, by 2012, mobile operator capital expenditures (CAPEX) on 3G cellular technology will overtake 2G.

Specifically, the ABI projects that, despite its current status as the dominant cellular technology, GSM (Global System for Mobile Communications ) will be superseded by WCDMA (Wideband Code Division Multiple Access)—probably exceeding $150 billion in operator CAPEX.
What accounts for this predicted shift? ABI cites increasing emphasis on data services (e.g. mobile TV and broadband Internet access), which requires more bandwidth than 2G technology can provide.
“ABI Research expects that investment in technologies supporting HSDPA, mobile TV, and mobile broadband services will continue to expand in the coming years,” said ABI analyst Shailendra Pandey, in a statement. “Also, by 2007, a good number of mobile operators will start rolling out IMS (IP multimedia subsystems), enabling them to rapidly deploy and launch enhanced revenue-generating multimedia services.”

An important factor in choosing technology to deliver these services is the speed of ROI.
“Mobile operators' attitudes towards CAPEX have changed over the past two or three years,” Pandey said. “They are clearly becoming more focused on an early return on their investments.”

ABI used two recent examples to illustrate its analysis and predictions.
During 2005, China Mobile’s (News - Alert) CAPEX in China alone was $8.86 billion, compared to Vodafone’s global CAPEX of $8.74. ABI called this remarkable, “considering the high value of CAPEX spent per-subscriber and per service revenue dollar generated.”
Also during 2005, Cingular’s (News - Alert) North American CAPEX was $7.475 billion, up 116 percent over 2004—due to the company’s investments in its WCDMA network.
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Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page.


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