As telecom capex contracts, the industry is being forced into a more efficient model. Some networks are already operating that way.
For the past decade, the telecom industry has been in a buildout cycle. Carriers have spent heavily to expand coverage, upgrade networks, and roll out 5G. Now, that cycle is slowing down.
Ericsson told investors that its North American sales were down 10% year-over-year and that North America “will be less important” to its business. For context, Ericsson sells the equipment that makes mobile networks work. When its sales slow, it’s usually because carriers themselves are spending less to build and expand their networks.
They are: Verizon recently reduced its 2026 capital expenditure guidance. And according to industry analysts, global telecom capex is expected to decline this year and continue trending down over time. In simple terms: the industry is pulling back on how much it spends to build network infrastructure.
Real connectivity challenges are facing the industry just as capex is winding down. And that raises a question the industry has mostly avoided: what happens to the parts of the network that never got adequate coverage to begin with, especially those in dense, high-traffic areas? These are areas where investment for coverage is critical, where redundancy and resiliency are much needed.
Coverage gap persists
For a while, the industry assumed the next phase of growth would come from new demand drivers, like generative AI. The assumption was that more infrastructure builds would follow more data and more usage. But the reality is different. Generative AI traffic today is roughly one sixteen-hundredth of what the network carries on any given day. That’s not the demand surge that resets an investment cycle.
That leads to a different conclusion, grounded in this new reality, and the one Ericsson put into its earnings call: growth has to come from use cases, mission-critical, enterprise, indoor, not from another round of nationwide buildout.
And under traditional tower-driven economics, the math for delivering those use cases no longer works.
AWS moment for telecom
Fifteen years ago, every Fortune 100 company ran its own data center. They owned the buildings, managed the servers, and ran everything themselves. Then cloud infrastructure changed the model. Amazon Web Services arrived, and everything flipped: pay for exactly what you use, scale when you need to, let someone else own that data center and its servers. Once a more capital-efficient model existed, capital followed.
Wireless is in the early innings of the same transition. The question isn’t whether carriers stop building: Verizon will still put up a tower in midtown Manhattan, and should. The question is what happens to every other location: the dense building, the underserved neighborhood, the stadium, the corner coffee shop, the community center that needs reliable indoor coverage.
The locations that used to be line items in a capex plan and, under the new economics, won’t be. That space needs a different deployment model. One where infrastructure is built by the people closest to the demand, paid for on a usage basis, and available to the carriers that can’t justify the build themselves.
The rebalancing
The capex pullback is a reckoning for how connectivity gets delivered. Carriers are already telling the market, in earnings calls and capex guidance, that the old model can’t sustain itself, even as demand for connectivity keeps growing.
Stefan Pongratz at Dell’Oro has put it plainly: the operators best positioned to scale back capex are the ones not investing heavily beyond their known use cases. The traditional model will not fund the gap it’s facing.
The industry is being pushed toward a model it has resisted for years: distributed, usage-based, and built closer to where demand actually lives. The carriers that figure out how to participate in that shift, rather than wait for another build cycle that may not come, will be the ones that close the coverage gap.
Mario Di Dio is the GM of Network at Helium, overseeing the development and lifecycles of network products that contribute to the Helium network and driving the roadmap for future technologies. With a focus on communication standards like LTE, 5G, and Wi-Fi, Mario works to enhance end-user connectivity experiences and increase network efficiency.
