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World Wireless Communications Test Equipment Markets
Frost & Sullivan, March 2005
Need for Stable 3G Services Push Test Equipment Vendors to Develop Products that Assure Quality Standards
The increasing popularity of multimedia services such as streaming video clips, online gaming, faster wireless Internet access, and cheaper voice calls makes third generation (3G) telephone services an attractive proposition among service providers. 3G services handle both voice and data more efficiently than 2G services do, reducing the cost of providing mobile services by well over 75 percent. However, despite telecom carriers skewing their capital investments toward wireless technologies such as 3G, no service provider or operator is likely to deploy 3G on a large scale unless they are sure about the stability of services associated with it. Inability to cope with interoperability in a multi-carrier environment could result in quality of service (QoS) issues. While this poses a serious challenge to network equipment manufacturers (NEMs) and handset vendors, test equipment vendors are consistently developing new products that help achieve end-user quality standards.
This Frost & Sullivan research service analyzes the world wireless communications test equipment markets, discusses key market drivers and restraints, and also presents strategic recommendations to deal with industry challenges. It further lists some of the key market and technology trends that could impact the demand for wireless communications test equipment.
Terminal Testing in WCDMA is Likely to Drive Demand for Test Equipment
European telecom operators have delayed their plans to launch wireless code division multiple access (WCDMA) networks due to technical and market issues associated with the technology. However, considering the billions of dollars spent on 3G licensing, handset manufacturers and infrastructure vendors are keen on support from test equipment vendors to roll out the service. One of the most pertinent issues with the global system for mobile communications (GSM) to WCDMA upgrade is interoperability of handsets. This has created an opportunity for test equipment vendors that test mobile stations for WCDMA technology.
Test equipment for wireless local area network (WLAN) is also in demand. While testing of both Bluetooth and WLAN platforms has traditionally been at the research and development levels, commercial introduction of these technologies has resulted in investments in new equipment. Growth in the Bluetooth market has not yet reached originally estimated levels, but WLAN has witnessed strong growth, especially in North America, notes the analyst of this research. With market expectations of convergence of WLAN with wireless cellular services, the demand for installation and maintenance test equipment is likely to potentially increase.
Emergence of WLAN Perceived as a Threat to 3G Services
The low cost of emerging wireless fidelity (Wi-Fi) services increases its demand, thus eroding potential business from 3G services. This has resulted in a growing concern in the market that WLAN might have the potential to replace 3G services. This resultant shift in business can restrain growth in the 3G market until network operators look at alternative opportunities including offering combined WLAN and 3G services.
Nevertheless, with data services expected to account for a predominant share of increase in average revenue per user (ARPU), most service providers are gearing up to offer advanced data services and are keen on deploying networks with high speed downlink packet access (HSDPA). This is an evolution of WCDMA that provides higher speed downlink data rates to enhance the performance and usability of WCDMA terminals with peak data rates approaching 14 Mbps. With the wireless sector becoming an extremely profitable business segment, U.S. operators such as Verizon Wireless and Cingular Wireless and European participants such as Vodaphone, T-Mobile, TA Orange Company, and Hutchison have been aggressively marketing 3G technology. These trends augur well for test equipment vendors as they scale up their sales to network operators, infrastructure vendors, and mobile equipment manufacturers that cater to 2.5G and 3/3.5G standards.
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