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Wireless Industry Preps for a Big Breakout

NEW YORK (TheStreet) -- The 2013 edition of the Mobile World Congress (MWC) held in Barcelona broke a record, with over 72,000 people attending the four-day show in the last week of February. Under the "New Mobile Horizon" theme, the MWC gathered 1,500 companies from more than 200 countries and has once more proven itself as the marquee event in the wireless industry.

At this year's conference, we saw both a rehash of already existing themes such as the ongoing migration to 4G/Long-Term Evolution (LTE), solving current wireless networks' capacity crunch and machine-to-machine (M2M) communication. The move to 4G is about to shift into high gear, with 145 commercial LTE networks announced in 66 countries as of January, as per the Global mobile Suppliers Association (GSA). The same organization forecasts 234 commercial LTE networks in 83 countries by the end of the year, which makes LTE the fastest-developing mobile standard ever.

Meanwhile, the mobile traffic explosion continues, as forecast by Cisco's (CSCO) latest Visual Networking Index (VNI) study released just before the start of MWC. In 2017, global mobile data traffic is expected to reach 11.2 exabytes per month, a 13-fold increase from 2012. The same study attributes a lot of that growth to mobile video, which will represent 66% of all mobile data traffic by 2017.

In order to cope, operators are looking more and more at mobile data offload services, including small cells and Wi-Fi. The idea is to reduce capital expenditures (CAPEX) while concomitantly lowering operational expenditures (OPEX) and consequently the operator's total cost per megabyte (MB). Case in point: Alcatel-Lucent claims that small cells can reduce network total cost of ownership (TCO) from 30% to 60%.

As a result, a wireless carrier's CAPEX will shift from the "front end" traditional Radio Access Network (RAN) toward smaller cells and backhaul. Our discussions at MWC revealed that the small-cell market is highly competitive, with large equipment makers such as Alcatel-Lucent (ALU), Cisco, Ericsson (ERIC), Huawei and NSN jockeying for position with one another and smaller "pure play" Wi-Fi vendors such as Ruckus Wireless. It is conceivable that the bulk of small-cell deployments in the future will be in heterogeneous, multi-vendor environments combining macro cells from one vendor and small cells from another. In fact, a couple of small-cell vendors confirmed that the bulk of their wins have come in exactly those setups.

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