Wholesale is going to be an important 'catalyst' for the upcoming LTE market, accounting for 103 million customers by 2016 says ABI Research. By Ian Scales.
ABI is predicting that what the industry calls Mobile Virtual Network Operator (MVNO: a clumsy and slightly inaccurate - not to say tainted - term, let's not use it) relationships will play a big role in the evolution of LTE and, therefore, the mobile market. What we're talking about here is an increasingly tiered market with wholesale network operators (let's call them WNOs) probably selling raw data services to various sorts of retail operators and data service providers as well as providing extra capacity for the existing mobile operators. who then sell retail-level services on to organisations and individual end-users
Two major factors are going to drive this shift: firstly, because LTE (and subsequent IP-based mobile networks) offer a much 'dumber' level of commercial and technical engagement than previous mobile networks, it will be less complex to develop wholesale-retail relationships: with LTE the raw material is an IP pipe. So the demand side of the wholesale equation is primed.
On the supply side, the huge cost of rolling out the new networks is naturally seeing existing mobile operators look to share costs by building various sorts of joint network - as in Russia with Yota or with Lightsquared in the US - or to view wholesale as a necessary part of the business model to drive the volume to justify the investment.
That's because the density of the LTE network (high-frequencies, smaller cells) just makes it a more expensive proposition. In many territories it's unfeasible to imagine multiple vertically-integrated competing networks all thriving and surviving as with the Gs 1, 2 and 3. 4G will necessarily be different.
ABI Research has therefore chosen to attach some fairly bullish numbers to the transition. It forecasts that there will be 103 million 4G wholesale subscribers, which it defines as subscribers managed through a separate retail service provider that buys access from a WMO by 2016. That's up from just 3.8 million in 2010.
According to Philip Solis, research director, mobile networks, these forecasts are conservative.
"We believe, with mobile consumer electronics vendors' adoption of this model being one factor that could greatly impact the potential of this market," the ABI press release has him saying.
ABI says that while the 4G wholesale market currently revolves entirely around WiMAX because of Clearwire and UQ Communications, things will shift rapidly to LTE in the next few years. Already on the horizon are Aero2, Callmax, LightSquared, MVS, and Yota (Scartel) and many more are expected to sprout up.
ABI says that while the market is forecasted to experience impressive growth globally, roughly one third of the anticipated 103 million 4G subscribers in 2016 will be from China and Japan. The United States and Russia will also be influential countries contributing to 4G wholesale market growth.
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