CSP network infrastructure spend expected to see recovery in 2021

The total network infrastructure spend is expected to grow in 2021 as we start to see further recovery from the COVID-19 pandemic. Dynamics related to COVID-19 has spurred increased bandwidth consumption and as a result accelerated the need to provide additional capacity to meet those needs. We expect total network infrastructure spends to trend positively in 2021.

As we have previously seen in 2020, CSPs were more cautious in the face of pandemic related challenges and uncertainty. The impact was felt more in the transport and core areas of the network, with operators still spending on access to meet immediate end-user needs. However, as early signs of recovery are more apparent, we expect investment on CAPEX to be in focus again.

In 2021, Omdia forecasts that worldwide fixed and mobile CSP capex will grow 3.5% YoY, yielding $341 billion in total capex. Omdia expects total network infrastructure equipment to grow 1.3% with strong growth in broadband aggregation (+7%) with investment in PON and next-generation PON infrastructure in focus. We are expecting a permanent change in consumer bandwidth demand patterns going forward with the surge in bandwidth demand and where it originates from, such as residential versus office, from COVID-19 related shutdowns in 2020. Service provider routers & switches and the optical equipment categories are expected to remain flat in 2021 as operators continued to remain cautious. Mobile infrastructure—the largest telecom spending area—is expected to grow 5% in 2021 as 5G investments continued to grow driven by China along with large-scale investments in other key markets including the US, Japan, South Korea, and Western European countries.

We expect to see growth in CSP capex in CY21 across all regions as US, China and Japan continue to increase investment in mobile network to meet bandwidth demand. US and China are progressing rapidly in 5G deployments with US completing its mid-band spectrum auction in late 2020. Omdia also expects that there will be another 600,000–700,000 5G macro base stations deployed in China by the end of 2021 with a cumulated total of more than 1.3 million.  We expect to see increasing activity in infrastructure deployment that was held up by COVID-19 in 2020 starts to see more traction across the world. Both North America and EMEA will also see Service Provider back in spending mode after some pandemic related operational challenges in 2020. However, some supply chain concern might continue to linger delaying the spend. 

Overall, the sentiment is generally positive, and carriers are more confident on spending in capex. There is some catching up due to the pandemic and we are also expecting drivers such as new architectures, larger scale 5G deployments and changing consumer demands to continue to spur investments on network infrastructure going forward. 

Get service provider (fixed and wireless) capex analysis by network infrastructure equipment type including broadband aggregation, mobile, IP routers/switches and optical accompanied by long-term capex forecasts in the full Service Provider Capex Market Tracker – 1H21. This report is an example of one of the many surveys, market forecasts, reports, and market data insights that make up the Service Provider Network Economics Spotlight Service from Omdia. 

This service shares global, in-depth coverage of market trends and conditions affecting telecom and mobile operators, including revenue, investment, outsourcing, and the global economy. Click here to download the overview now.