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April 02, 2014

Mobile Packet Core Spending to Reach $18 Billion Fueled by Mobile Broadband Demand

The first thought for many when the phrase “valuable commodity” comes up are many of the great standards: oil, gold, platinum, even silver. But few think of bandwidth until the time comes to connect and get something done, and with a rapidly increasing quantity of things to do with bandwidth—particularly bandwidth of the mobile variety—bandwidth will become an increasingly valuable commodity, driven by mobile packet core technology. A new report from ABI Research, meanwhile, shows just how valuable this technology will get.

The ABI Research report suggests that spending on mobile packet core technology alone—one major component of expanding network capacity—will reach $18 billion through just 2017. The early adopters on this front were Japan, Korea and the United States, at last report, followed up by the rest of the world, which is now looking to make such significant moves in the field that the market will take off to a staggering degree, bolstered by rapidly increasing demand for bandwidth.

In fact, the ABI Research report notes that operators will put packet core technology to work mainly because it can scale with the demand for bandwidth. But by like token, this is largely unfamiliar territory for mobile providers, and providing for the kind of demand that's being seen right now is going to be a difficult proposition by any measure in the short term. That's leaving operators eager to understand the best alternatives available, and how to measure skyrocketing demand with the costs associated with meeting that demand. Yet, the ABI Research report also notes that--thanks to economies of scale, improved efficiencies and business transformations to push more toward software—spending on packet core technologies will start to decline even with growth in mobile broadband thanks to improvements overall in the system, allowing service providers to essentially do more with less.

ABI Research practice director Joe Hoffman offered up some commentary on the issue, noting “Operators are desperately seeking new ways to manage CapEx, OpEx and Revenue Top Line, and the mobile packet core is the network intelligence to optimize all three. Network functions virtualization built on WebScale IT is poised to radically upend the existing order of vendors.” Hoffman's conclusion is perhaps the most stark: “As the telecom market transforms to WebScale, infrastructure vendors should face this reality head-on and fasten their seatbelts as it's going to be a bumpy flight.”

Indeed, the uses for bandwidth only increase. With some voice services going to data rather than a separate voice channel as is the case with voice over LTE (VoLTE) connectivity, as well as the rapid increases in mobile video, video conferencing, mobile gaming and a host of other connection uses, the demand for bandwidth will only increase. Consider further the rise of wearable technology that will demand bandwidth of its own to send and receive information and a geometric rise in bandwidth use may be in line. Customers will not take tales of shortages and other woes kindly, nor will said customers likely abide big price hikes to get that bandwidth, so expansion seems to be in order, and in an efficient fashion. Gains have been made on this front in small cell technology and the like, but clearly, measured, planned expansion will be necessary, and on a fairly large scale.

Customers everywhere are waiting with baited breath to see if mobile service providers are up to the challenge of providing bandwidth inexpensively and in the quantities required, but only time will tell if said providers can pull it off.




Edited by Cassandra Tucker


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