Mobile Industry Forecasted to Experience $9.2 Billion Shortfall in Backhaul Investment

NEW YORK, NY -- (Marketwire) -- 03/12/13 -- Shares of communications equipment makers have surged in the past week after competitor Ciena Corp. released strong quarterly results. This was our best profitability since the downturn," said Ciena's CEO, Gary Smith. "I think it shows an inflection point in buying trends." Research Driven Investing examines investing opportunities in the Communications Equipment Industry and provides equity research on Tellabs, Inc. (NASDAQ: TLAB) and DragonWave, Inc. (NASDAQ: DRWI) (TSX: DWI).

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The growing demand for smartphones has been a key factor for growth within the communications equipment industry. Smith in a recent interview has stated that customers have been attracted to the latest modern networking technology instead of the conventional equipment sales. Recently, market researcher IDC has forecasted smartphones will outsell feature phones for the first time ever in 2013.

"Smartphone prices have fallen globally, the smartphone strata are wider than ever, and the roll-out of data-centric fourth-generation (4G) wireless networks are three factors that have made these 'do-it-all' devices an increasingly attractive option for users," IDC said.

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A recent Strategy Analytics study, commissioned by Tellabs, forecasts the mobile industry will experience a $9.2 billion shortfall in backhaul investment. Over the last five years global mobile traffic has increased 13 times, and is forecasted to increase another 5 to 6 times by 2017.

"As many as 40% of mobile users list poor network performance as a reason for leaving an operator," said Sue Rudd, Director, Service Provider Analysis, Strategy Analytics. "At today's backhaul investment levels, operators could create a significant backhaul capacity shortage. This shortfall could diminish quality of service and, in turn, increase customer churn. Operators need to rethink their backhaul investments as they deploy small cells and LTE capacity."

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