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Gaining traction: Global 3G deployments pick up pace

May 30, 2011

The evolution of 3G networks has spearheaded cost-effective wireless communications in both developed and developing countries. Driven by superior data speed, improved access to multimedia services and videoconferencing, these technologies are increasingly being deployed for fixed and mobile uses.

As of February 2011, 3G networks have been deployed in more than 165 countries and regions. There have been about 506 commercial 3G deployments worldwide, of which 383 have been on WCDMA networks and 123 on EVDO networks.

Region-wise 3G network growth 

Of the 5 billion wireless subscribers across the world, as of September 2010, over 690 million were using 3G services. In other words, 14 per cent of the global wireless subscribers are connected through 3G networks.

The deployment of 3G mobile services is significantly more advanced in some countries than in others. Europe and Asia Pacific (including Japan) collectively dominate the global 3G/3.5G subscriber base. Of the total 3G subscribers as of September 2010, 492 million, that is, 71 per cent were in these markets.

While the boom in the Asia-Pacific 3G market over the past few years was driven primarily by mass-scale deployments in Japan, the dynamism is now clearly pointing towards China and India. The number of 3G/3.5G subscribers in China is expected to significantly increase with the rise in network deployments. As of December 2010, China had 860 million subscribers, of which 3G subscribers accounted for about 50 million. China’s Ministry of Industry and Information Technology expects the numbers to surge to 150 million by the end of 2011.

Other emerging economies like Brazil and Russia are also making significant progress. According to a study by Morgan Stanley, in the first half of 2010, the global 3G subscriber base increased by 37 per cent, 941 per cent in China, 148 per cent in Brazil and 81 per cent in Russia. Some organisations have estimated that in 2011, over 50 per cent of 3G mobile phones worldwide would be shipped to emerging markets.

Clearly, Asia, the Middle East and Africa are fast emerging as favourable markets for 3G deployments and are likely to see enhanced 3G network rollouts over the next three-four years.

The key players dominating the 3G market include AT&T, China Mobile, China Telecom Corporation Limited, China Unicom (Hong Kong) Limited, KDDI Corporation, NTT DOCOMO, SK Telecom, T-Mobile International AG & Co. KG and the Vodafone Group.

3G value chain 

One common view held across the industry is that all links and stakeholders in the chain are making profit from the 3G market. Globally, operators have used mobile broadband, handset-based data access and applications/services on 3G to drive non-voice contribution to ARPUs, which is evident from the significant increase in its value over the past few years.

Statistics show that in Japan, the ARPU of data services is set to overtake that of voice services, and in the US, AT&T’s data service revenue witnessed a 30 per cent increase over 2009. As consumers’ demands for 3G applications and mobile internet experience are increasing, this growth trend is bound to continue. ABI, a market research company, estimated that by 2014, users’ average monthly data use will exceed the total annual data use of 2008.

As for manufacturers, Qualcomm shipped a record 399 million MSM chips in 2010, an increase of 26 per cent over 2009. Chinese companies like ZTE and Huawei have also benefited from the increasing uptake of 3G services.

In the intelligent terminals market, datafrom Canalys, a market research company, shows that over 80 million smartphones were shipped in the third quarter of 2010 globally, up 95 per cent year-on-year and 30 per cent compared to the preceding quarter. Besides, Gartner predicted that smartphones will account for 45 per cent of the mobile phone market volumes in 2014 against only 16 per cent in 2009. Emerging economies such as China will continue to witness strong demand for smart terminals.

In 2010, sales of ZTE’s terminal products continued to grow rapidly, with a sales volume increase of 50 per cent year-on-year. Huawei is estimated to have shipped over 120 million units of terminals in 2010, an increase of 30 per cent year-on-year. Consistent with the rapid growth of terminal manufacturers, chip providers have also witnessed significantly increased shipments.

In 2010, carriers in China focused on low-cost smartphones as a part of their development strategy. Echoing the strategies of the carriers, Huawei and ZTE introduced several 1,000-yuan smart terminals such as C8500 and N600, which have been well-received by the market.

As driving-force providers, the chip manufacturers have attached more importance to the integration of the products. In 2007, baseband-integrated application processors accounted for 28 per cent of the total shipment of smartphone application processors; in the first half of 2010, the figure increased to 70 per cent.

As for operation systems, the Android platform and the newly released Windows Phone 7 both received attention worldwide in 2010. The Android platform has become the most powerful driver of the global smartphone market. In the third quarter of 2010, 20 million Android phones were shipped, registering an increase of 1,309 per cent over the same period in the previous year.

Going forward 

Even as 3G subscriptions continue to grow, operators are moving towards the process of deploying 4G networks. 4G deployment plans have gained considerable momentum as the number of mobile operators committed to deploying LTE technology has increased more than twofold in the past year. According to the Global Mobile Suppliers Association report, as of May 2011, 154 firm LTE network deployments are in progress or have been planned in 60 countries, including 20 networks which have been commercially launched. Further, 54 operators in 20 other countries are engaged in LTE technology pilot trials (pre-commitment trials). Taken together, it means that 208 operators in 80 countries are today investing in LTE.

LTE systems were commercially launched in December 2009 in Norway and Sweden, and have so far been installed in countries like Austria, Denmark, Estonia, Finland, Germany, Hong Kong, Japan, Lithuania, Norway, the Philippines, Poland, Sweden, Uzbekistan and the US. 

While 3G systems are meeting the challenges to deliver higher data capacities today, LTE brings in the opportunity for additional spectrum, more capacity and lower cost, and is essential for taking mobile broadband to the mass market. Even as LTE begins to make its way into mature and developed markets, 3G subscriptions will continue to witness robust growth, driven by the strong demand for mobile broadband.


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