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Mobile Operators Profitability Challenged Within Three Years, Says Study

NAPERVILLE, Ill. Feb. 3, 2011

  • North America
  • Asia Pacific
  • Western Europe

The study puts timescales on an issue that has concerned operators since users began embracing the mobile Internet. Traditional ways of handling dramatic traffic growth are expensive. Meanwhile competition has increased pressure on revenues.

Rob Pullen

Vikram Saksena

"To provide critical intelligence for operators to survive and prosper, we’re introducing a new smart mobile backhaul solution and an improved smart mobile packet core platform," Dr. Saksena said.

Network intelligence encompasses many variables in carrier networks. Powerful analytics enable smart networks to deliver the right bandwidth to the right users at the right time. Intelligence brings new traffic management efficiencies, new business models and new revenue streams. Intelligence will reverse the trend of declining carrier profits.

Regional Differences

North America

Asia Pacific Asia Pacific

Western Europe

Note to Editors

Click here for Tellabs "End of Profit" study executive summary.

Click here for related Tellabs product announcements:

About Tellabs

www.tellabs.com

Appendix

Assumptions, Methodology and Data Sources

The model that underpins this study uses forecast data and accepted industry costs, trends and strategies to estimate the point at which cost exceeds revenue for mobile operators.

The model does not address specific operators. The model generalizes technology, costs and carrier strategies to create a hypothetical carrier, representative of a given region.  All hypothetical operators are utilising network technologies from the GSM family.

CAPEX costs are assumed to be consistent across all regions. Price erosion has been applied to all technologies and estimated sunk costs are accounted for. OPEX has been calculated as a percentage of CAPEX, the lowest percentage for technologies that offer mobile operators the lowest network carriage costs.

There are inevitably factors outside of this model that influence both costs and revenue. However, the significant technologies and trends are incorporated, and CAPEX and OPEX are as comprehensive as possible and based on operator-approved KPIs.  The cost of acquisition – or the resulting benefits – of spectrum has not been factored into this model due to inconsistency across countries.

The results are particularly sensitive to the percentage of macro traffic offloaded onto indoor networks, such as femtocells and WiFi. A gradual increase to 75% offload by 2015 moves the point where revenues fall below total cost (CAPEX + OPEX) to 2014 and beyond in all regions of interest.

Tellabs used multiple sources of data in this study. Analysys Mason traffic and revenue forecasts for operators in developed markets provided the base. Tellabs also used its own, proprietary data to establish network capital and operating expenditure costs for operators in developed markets. This data is drawn from Tellabs’ vast experience of working with many operators in the regions.

the United States

SOURCE Tellabs

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