Verizon, AT&T To Cut CapEx as Focus Turns from LTE to Fighting Network Congestion http://www.billingworld.com/news/2013/04/verizon-at-t-to-cut-capex-as-focus-turns-from-lte.

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April 2, 2013
By Craig Galbraith
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Posted in News, Verizon, AT&T, Tier 1, United States, the Americas, Capex, Finance & Regulatory, 4G, LTE, Wireless,
Wireless Operators, Wireless Services, Mobile Devices, Sprint, T-Mobile
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Tier 1 operators' spending will remain relatively stable over the next two years, or even decline slightly, as they transition
from network rollouts to capacity-boosting efforts. That's one finding in Technology Business Research's (TBR) newly
released "4Q12 U.S. & Canada Mobile Operator Benchmark" report.
"U.S. operators will rely on connections, shared data plans and LTE data services to drive revenue and subscriber
growth throughout 2013," said Eric Costa, an analyst in TBR’s networking & mobility practice.
Telco giants Verizon and AT&T continue to dominate the market in revenue and margins, TBR noted, despite taking a
large blow to margins in 4Q12, attributable to record smartphone sales. Verizon pulled ahead of AT&T during the fourth
quarter with higher revenue growth, more subscriber adds and better margins.
AT&T and Verizon Wireless are improving network speeds and capacity by wrapping up initial LTE deployments and
moving to small cells and LTE-Advanced upgrades, all while Sprint and T-Mobile have just begun their LTE
deployments. As a whole, TBR says operator industry capex spend continued to increase in the second half of last year,
remaining higher than the previous two years; however, TBR believes that capex spend will slowly decline in dollars
spent through 2014 as larger operators wrap up LTE investment.
As the bulk of Tier 1 LTE deployments wrap up by the end of the year, operators will continue to invest in the networks
through various methods to boost coverage and capacity. They will target acquisitions that provide enough spectrum to
support data traffic growth over the long term, TBR said. The completion of LTE networks will force operators to
differentiate their networks around speed and efficiency, resulting in LTE-Advanced and small-cell advancements to
supplement coverage in highly trafficked areas. Verizon and AT&T are the first to transition to these capacity-improving
technologies, though T-Mobile and Sprint are slated to follow suit in 2014.
Total connections will continue to grow at an accelerating pace over the next five years, TBR said, driven by shared
data plans, widespread LTE deployments and the proliferation of M2M. The connected device segment will create
revenue streams and drive growth in the wireless industry. Operators are preparing for this growth by creating solutions
in the security, automotive, health-care and utilities sectors, and promoting shared data plans, specifically for AT&T and
Verizon.
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