Why Carriers are increasing CAPEX on 3G Networks

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Cellular-news.com is reporting that carriers operating in less developed nations are showing a sharp increase in CAPEX (“capital expenditure”) for rolling out 3G networks, matching the recent trend of larger carriers in more saturated markets.

Why does rolling out a 3G network cost so much? Mainly because 3G signals travel shorter distances than 2G’s, particularly in the case of W-CDMA, so more cell sites are needed: 3G can require four to five times as many base stations to obtain the same coverage as 2G networks.

ABI Research analyst Shailendra Pandey says, “In spite of falling prices for 3G infrastructure, building a 3G network with good coverage is expensive and time-consuming. For a mobile operator, 3G network CAPEX spending depends on the reusability of its existing 2G equipment and infrastructure.”

Existing coverage also determines the requirements for complementary wireless technologies such as GPRS, EDGE, Wi-Fi and WiMAX. Most operators with GSM networks prefer to introduce a GPRS platform first to increase usage of data services, and then migrate to 3G networks later. ABI Research predicts that the majority of operators worldwide will invest in W-CDMA networks in the next five years. However in North America, CDMA2000 will continue to be the dominant technology in terms of CAPEX investments, and operators will continue to deploy 1xEV-DO networks although investment in W-CDMA will roll out as well.