Capex Shifting to Fixed From Wireless in 2017: MKM

Overall telecom and cable operator capital expenditure is set to shrink in 2017 but investments in fixed line infrastructure will see an uptick, according to the analyst team at industry and equity research firm MKM Partners .

In a research note issued early Wednesday, the MKM team noted that it expects total global service provider capex (including cable) to decline by about 1% to US$314 billion, with wireless network capex receding year-on-year by about 4% as mobile operators step back from major macro 4G network rollouts in the run up to the 5G era.

Wireline capex, though, is expected to grow by about 3% to $147 billion, with investments in 100G+ and ultra-broadband access networks driving that rise, according to the MKM team.

And what's driving that reverse? Well, the demands of video traffic and, perhaps less obviously, 5G. (See Broadband Future Looks Like Video.)

As we've pointed out previously, 5G isn't going to fly unless the very high-speed wireless access connections of the future are supported by very high capacity fixed line networks. (See BBWF: G.fast, Video, NG-PON2 & a New Way of Thinking, Italy's Fastweb Rolls Out 1Gbit/s FTTH for 5G Small Cell Support and Beware the Bottleneck! Why 5G Is Driving an Ultra-Broadband Boom.)

And the MKM team agrees. "We view the expected shift toward Wireline spending in 2017-2018 as pre 5G-spending since it will require a much more robust Wired Optical, Access, back-haul and front-haul infrastructure to be able to achieve the 10x-100x Wireless speed increases over 4G that Carriers envision for 5G in 2020 and beyond," notes the research team. "Another driver of the Wireline spend is the strategy many Carriers now have of becoming video content providers in addition to Access providers," it adds.

— Ray Le Maistre, , Editor-in-Chief, Light Reading