Subject: [NEXTEL-1] Carrier Capex: Hey Small Spender

From: Marcel <[email-masked]>
Date: Mon, 10 Feb 2003 20:19:00 -0500

Carrier Capex: Hey Small Spender

February 8, 2003 6:17am

Wireless carriers have a mantra when it comes to spending these days: less is more. With
the CTIA's
Wireless 2003 event looming, the most ambitious carriers merely pledge to keep their
spending flat
throughout 2003, while the rest are cutting back.

To wit: Verizon Wireless, which spent $4.4
billion in 2002, expects to spend between $4.4
billion and $4.7 billion this year. T-Mobile USA
predicts this year's capex will match last
year's $2 billion. Sprint PCS plans to shave
spending from $2.67 billion to $2.35 billion.
And AT&T Wireless, which spent $5.1 billion in
2002, vowed to slash its capex to $3 billion
this year.

The first thing carriers will look to cut back on
is network infrastructure as they take a break
from recent massive upgrades. In November,
AT&T Wireless completed its roughly $2.5
billion nationwide GPRS network. A month
later, the company pulled back hard on the
reins, and its goal of building next-generation
W-CDMA networks in 13 cities by mid-2004
suddenly became a more modest plan to
convert just four cities by 2004's end. Verizon Wireless is also likely to take a breather
after its recent
upgrade to next-generation CDMA 1XRTT technology.

All told, spending on North American wireless network infrastructure will shrink more than
16% in 2003,
according to IDC, which estimates this year's total at about $10 billion. One possible
standout is Cingular
Wireless, which is only halfway through its projected $2.7 billion upgrade to its GPRS
networks. Cingular
aims to have the project 90% done by the end of 2003. “That's going to attract spending in
a major way,”
said IDC research manager Shiv Bakhshi.

Most carriers will use their 2003 budgets to boost capacity and Spackle coverage gaps in
the name of
service quality, Bakhshi said. Expect carriers to shop for smaller-ticket items such as
software and
applications: Nextel, for example, hopes to double voice capacity by deploying Motorola's
voice-coder
software this year. And if the deadline for number portability finally holds firm in
November, carriers say they
will have to spend about $1 billion to meet it.

As wireless network spending blooms in Western Europe (more than doubling over the next
five years),
carriers on this continent will continue to pinch their pennies for at least the next
half-decade, according to
IDC data (see figure). It may be 2003 for years to come.

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