2013 LTE Capex and Opex predictions. By 2017, U.S. carriers expected to spend over $90 billion in capex and opex

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According to a recent LTE capex and opex forecast published by iGR, Tier One operators (AT&T, Verizon Wireless, Sprint, and T-Mobile USA) and Regional and Small Operators (RSOs) are projected to spend  by 2017 $37 billion in LTE capex and $56 billion in opex.

“US capex spending is forecasted to be 10% of global capex spending and will peak in 2013″ said Iain Gillott, President of IGR. “The radio equipment, which includes base station equipment, tower modifications, installation and construction, represents 70% of the $37 billion capex budget, with backhaul and evolved packet core expenditures representing the balance.”

“By 2017, US opex spending by US carriers is projected to be $56 billion,” said Gillott. “and represents expenditures required to keep the network running every month. Specific elements include radio maintenance coupled with ongoing cost of backhaul and transport.”

Key takeaways from the interview include:

  • In 2013, Tier One expenditures will be $10 billion compared to only $750 million by the RSOs.
  • Of the total U.S. LTE infrastructure capital expenditures forecast of $37.5 billion, RSOs are expected to spend only $3.2 billion.
  • Operating expenditures by RSOs are expected to be $2.1 billion, a small percentage of the expected $56.5 billion opex expenditure forecast.
  • iGR’s LTE cost model is based on the amount of data the network is able to support and deliver. The Capex cost model is based on the cost required to add 1 GB of data capacity to the network, while the opex cost model is based on the cost per user per month.
  • Equipment vendors selling to RSOs will need to adjust their sales and product strategy because RSOs will deploy more hosted solutions to include shared packet core and policy engines.

For more information on the report contact Iain Gillott at (512) 263-5682 or by email at [email protected]

9 Responses to “2013 LTE Capex and Opex predictions. By 2017, U.S. carriers expected to spend over $90 billion in capex and opex

  1. Jeff Mucci says:

    Are you surprised by iGR’s U.S. carrier $56.5 billion dollar operating expense expenditure estimate?

    Please let us know your thoughts.

    • John Celentano says:

      Seems inordinately high considering LTE networks are brand new! Part of the promise of LTE operation is that it is more efficient with a lot more built-in software for managing the network than earlier generation technologies. I’d like Iain’s clarification on his estimate.

  2. GIAM says:

    Great video! Does this report include a further breakdown of the Capex & Opex (estimated cost by category)? For example, what will be spent on the decommission of cell sites, since 40-50% of carriers plan to decommission? Thanks

  3. Iain says:

    Thanks for the question and feedback. The cost of decommissioning 3G cell sites is not included in the calculation – the capex number includes the cost to deploy LTE only. The forecast does include the cost of LTE RAN, backhaul and EPC.

    Hope this helps – happy to chat mreo as needed.

    Thanks.

  4. Scott says:

    I think the forecast regarding the CAPEX (“US capex spending … will peak in 2013) may be off. It’s more like 2014-2015. ONly Verizon is done and the others have a long way to go. Also, the Opex/Capex ratio is off as well. During the build it’s almost all CAPEX. OPEX really cannot be broken out to LTE alone. But if it was, the OPEX would likely account for a very small share of the total cost of deploying LTE.

  5. Dan says:

    Question for Iain – does the CapEx cost include site acquisition and civils?

    I am going to assume it doesn’t include spectrum license fees on the basis you are looking at US market and the spectrum has already been obtained.

  6. Without even having to do a lot of heavy lifting, the $56 billion opex number for keeping the networks “running” is very high and, frankly, not realistic. Depending on what is being included in the number, there can be a degree of up or down on either side of a core “operational threshold” (as we like to examine it). Based on the vendors who are selling into the networks and their performance/equipment function claims, we think $56 billion is high by as much as 30-40 percent above operational threshold for efficient performance on the combined networks. We have done a lot of research to back that assertion.

Trackbacks/Pingbacks

  1. [...] Verizon alone spent $10 billion to acquire the 700 Mhz licenses to build its LTE network, but research group iGR projects that all U.S. carriers will have spent a total of $37 billion on building their LTE networks by the [...]

  2. [...] Verizon alone spent $10 billion to acquire the 700 Mhz licenses to build its LTE network, but research group iGR projects that all U.S. carriers will have spent a total of $37 billion on building their LTE networks by [...]


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