Analysis of the Latin American LTE Test Equipment Market Spectrum Frequency Auctions and Quality Optimization Drive Growth

Transcription

1 Analysis of the Latin American LTE Test Equipment Market Spectrum Frequency Auctions and Quality Optimization Drive Growth April 2015

2 Contents Section Slide Number Executive Summary 3 Market Overview 10 Total LTE Test Equipment Market Drivers and Restraints 21 Forecasts and Trends 32 Market Share and Competitive Analysis 44 Mega Trends and Industry Convergence Implications 62 CEO s 360 Degree Perspective 68 Research and Development Segment 74 Manufacturing Segment 79 Installation and Maintenance Segment 84 Monitoring Segment 89 Country Analysis 94 The Last Word 108 Appendix 111 2

3 Key Findings LTE in Latin America is still in an embryonic phase of its deployment compared to other developed regions. In 2014, LTE subscriptions in Latin America represented % of total mobile subscriptions in the region, whereas LTE in North America and Western Europe represented % and %, respectively. A total of LTE networks were deployed in countries across Latin America in In most cases, at least % of mobile operators covered its client base population. LTE mobile subscriptions totaled million in Latin America in LTE mobile connections are estimated to number about million in the region by the end of At least LTE launch commitments in countries are expected in More than operators in countries are committed in an LTE trial for the next years. The total LTE test equipment market reached $ million in 2014, and the installation and maintenance (I&M) and monitoring segments reached almost $ million in Rohde & Schwarz, Anite, Ascom, JDSU, and Anritsu are the top participants for the total LTE test equipment market. Source: Cisco; 4G Americas; Frost & Sullivan 4

4 Key Findings (continued) The LTE test equipment market grew 7.4% in the base year, 2014, compared to previous year. Frost & Sullivan foresees a sustained growth in the LTE test equipment market, picking up to a 13.2% compound annual growth rate (CAGR) over the forecast period of The manufacturing test equipment market held the largest market share at 53.8%, followed by I&M, monitoring, and research and development (R&D). The 3 biggest countries for the Latin American LTE test equipment market are Mexico, Brazil, and Colombia with market share of 24.7%, 18.3%, and 17.8%, respectively. Business opportunities are increasing in Chile and Peru. Argentina and Venezuela are potential candidates to experience notable total market growth. Central America and the Caribbean are behind the rest of Latin America in both number of LTE mobile subscriptions and the rate of growth. Renting options for short-term projects are increasing opportunities for test equipment vendors in countries such as Mexico, Colombia, Chile, and those within Central America. The benchmarking quality programs required by local regulators and optimization solutions to support multi-technology networks in diverse frequency bands are becoming key requirements. Source: Frost & Sullivan 5

5 Market Engineering Measurements Total LTE Test Equipment Market: Market Engineering Measurements, Latin America, 2014 Market Overview Market Stage Market Revenue Market Size for Last Year of Study Period Base Year Market Growth Rate Growth $43.8M $ % (2014) (2019) (2014) Compound Annual Growth Rate Customer Price Sensitivity Degree of Technical Change Market Concentration 13.2% % (CAGR, ) (scale:1 [low] to 10 [high]) (scale:1 [low] to 10 [high]) (market share held by top 3 companies) Decreasing Stable Increasing For a tabular version, click here. Note: All figures are rounded. The base year is Source: Frost & Sullivan 6

6 Market Engineering Measurements (continued) Competitor Overview Number of Competitors Number of Companies that Exited* Number of Companies that Entered* More than (active market competitors in 2014) (2014) (2014) Total Addressable Market Replacement Rate Industry Advancement Average Product Development Time 3-4 years 9 18 Months (average period of unit replacement) Decreasing Stable Increasing. *Note: Companies with revenue of more than $0.5 M All figures are rounded. The base year is Source: Frost & Sullivan 7

7 CEO s Perspective A number of strategic commercial plans are expected to introduce the first voice-over LTE (VoLTE) networks in Major growth opportunities are coming from monitoring and benchmarking tools across the Latin American region. Local regulators are demanding carriers with greater focus on optimization and measurement of network quality in certain countries such as Mexico, Peru, and Chile. Leading testing companies have demonstrated an understanding of regional market needs, wherein conducting short-term projects through renting options is required. A number of LTE deployments in the 700 MHz band are expected to increase, with a focus on rural and dense urban areas in Source: Frost & Sullivan 8

8 Associated Multimedia The progress of LTE deployments augurs potential future growth for the Latin American LTE test equipment market Integrated, Backward and Forward Compatible Test Equipment is Preferred for LTE Networks and Devices Latin America LTE Test Equipment Market in 2015: Challenges and Perspectives Source: Frost & Sullivan 9

9 Market Overview Return to contents 10

10 Scope of Study Scope Geographic coverage Latin America Study period Base year 2014 Forecast period The focus of this study is to discuss and analyze the various types of test equipment and technologies likely to drive LTE test equipment market growth across Latin America. This study covers the major countries of Latin America: Brazil, Mexico, Argentina, Colombia, Chile, Paraguay, Peru, Venezuela, Ecuador, Uruguay, Bolivia, Central America, and Caribbean countries. The LTE test equipment market relies heavily on the wireless telecommunications industry, which consists of service providers (SPs), network equipment manufacturers (NEMs), and handset manufacturers. Ultimately, market sustainability depends on the ability of SPs to cater to consumer expectations. Source: Frost & Sullivan 11

11 Market Definitions The market is primarily broken down into the following 4 segments: Research and Development (R&D): The R&D test equipment market segment includes radio frequency (RF) generators, RF analyzers, load/functional testers, and protocol analyzers used in research laboratories during the pre-deployment stage. Manufacturing: The test equipment covered in this section of the study includes the systems used to test mobile user equipment and services. These devices include bench-top as well as single-box testing systems that are used to evaluate the performance, protocol, and capability of cellular access devices, such as cell phones and smartphones, as well as connected devices, such as laptops, netbooks, notebooks, tablets, and wireless-enabled personal digital assistants (PDAs). Installation and Maintenance (I&M): The test equipment included in this segment comprises RF handheld instruments for troubleshooting and equipment for the maintenance of wireless base stations and repeaters. Access networks, air interfaces, base station testers, drive tests, and network performance test equipment are included in this segment. Monitoring: The network monitoring systems covered in this segment include both probe-based and software-based solutions that deliver end-to-end QoS and QoE visibility, and real-time Internet protocol (IP) service monitoring and verification. Monitoring protocol analyzers as well as active and passive monitoring systems are also included. Key: QoS = quality of service; QoE = quality of experience Source: Frost & Sullivan 12

12 Market Overview Wireless Standards by Technology Wireless Communications Technologies Market: Wireless Standards by Technology, Latin America, G Technologies 3-3.5G Technologies 4G/LTE Technologies GSM UMTS Flash-OFDM o GPRS W-CDMA (UMTS) LTE Advanced o EDGE/EGPRS HSPA IEEE m o EDGE Evolution o HSDPA CSD HSCSD o o HSUPA HSPA+ CDMA UMTS-TDD o o cdmaone CDMA2000 (1cRTT) (2.75G) TD-CDMA TD-SCDMA WiDEN iden D-AMPS IS-95 PDC GAN/UMA CDMA2000 (EV-DO Rev.B/3cRTT) (3.75G) 3GPP LTE WiMAX Source: Frost & Sullivan 13

13 Distribution (%) Market Overview Wireless Standards Analysis Key Takeaway: Between 2016 and 2019, 3G will take over as the leading wireless technology. Wireless Communications Technologies Market: Wireless Standards Percentage Distribution, Latin America, LTE G G Year 2G will remain the dominant technology until 2015 in Latin America because many users have handsets compatible only with GSM/EDGE. GSM, CDMA, and IDEN are declining in the region in order to reassign their band spectrums to 3G and LTE. In 2016, 3G will be the leading mobile technology with 57.9% of total mobile connections in the region. The increasing mobile traffic and the number of connected devices are contributing to the increasing adoption of 3G. LTE will represent approximately 20.2% of total mobile subscriptions by In terms of population coverage, in 2014, LTE had around 20% of total population coverage in Latin America, and it is expected to grow to near 65% by the end of Note: 2G is covered mostly by GSM. 3G is covered mainly by HSPA. Source: 4G Americas; Ericsson; Frost & Sullivan 14

14 Market Overview LTE Frequency Band Spectrum Analysis Key Takeaway: A total of 53 LTE networks are provided in 21 countries in the Latin American region. Wireless Communications Technologies Market: LTE Frequency Band Spectrum Analysis, Latin America, LTE- 1700/2100 AWS LTE-2600 MHz LTE-700 MHz LTE-1900 MHz LTE-1800 MHz Distribution (%) Number of Operators LTE Band Covered Countries Covered Antigua and Barbuda, Argentina, Colombia, Dominican Rep., Ecuador, Mexico, Paraguay, Peru, Puerto Rico, Uruguay, and US Virgin Islands , 38 Brazil, Chile, Colombia, and Costa Rica , , Antigua and Barbuda, Bahamas, Bolivia, Cayman Islands, Dominica, and Puerto Rico Dominican Rep., Guatemala, Mexico, Paraguay, Peru, Puerto Rico, Uruguay, and US Virgin Islands Aruba, Brazil, Costa Rica, Dominican Rep., and Venezuela Source: 4G Americas; Frost & Sullivan 15

15 Market Overview LTE Frequency Band Spectrum Analysis (continued) Key Takeaway: More than 26 operators in 20 countries are committed in an LTE trial for the next 4 years. Wireless Communications Technologies Market: LTE network Deployments, Latin America, LTE Networks 69 LTE Networks 95 LTE Networks Number of LTE deployments LTE launch commitments in 8 countries in 2015 Argentina: Claro and Arlink (1700/2100 AWS) Brazil: Algar Telecom (2600 MHZ/ 700 MHz ) and Sercomtel (2600 MHz) Puerto Rico: Aeronet (2500) Venezuela: Movilnet (1700/2100 AWS), Movistar (AWS / 2600 MHz), and DIRECTV (2600 MHz) 26 pre-commitment LTE planning trials for the next 5 years in 20 countries in Latin America By the end of 2019, 95 LTE network deployments expected in the region Barbados: LIME (1900 MHz); Belize: BTL (850, 1900 MHz); Bermuda: CellOne ( 850 MHz); British Virgin Islands: Digicel (to confirm); Cuba: Etecsa (to confirm); El Salvador: Digicel (to confirm); Guatemala: Tigo ( to confirm); Honduras: Hondutel (to confirm); Jamaica: Digicel (to confirm); Dominican Rep.: WIND (2600 MHz); Mexico: RED Mayorista (700 MHz); Paraguay: TIGO (2600 MHz); Venezuela: Movilmax (2600 MHz) Source: 4G Americas; Frost & Sullivan 16

16 Key Questions This Study Will Answer Is the market growing, how long will it continue to grow, and at what rate? Which of the LTE test equipment market segments are presenting major growth opportunities? What are the latest key technological trends present in the LTE test equipment market? What impact do these trends have on the industry? Are the products/services offered today meeting customer needs or is additional development needed? What future deployments are planned for LTE in the Latin American market by country? Which countries in Latin America are presenting major growth opportunities for LTE test equipment? Source: Frost & Sullivan 17

17 Market Segmentation Key Takeaway: The manufacturing test equipment segment is set to dominate the market throughout the study period. Total LTE Test Equipment Market: Percent Revenue Breakdown, Latin America, 2014 R&D 3.8% Monitoring 19.1% I&M 23.3% Manufacturing 53.8% Note: All figures are rounded. The base year is Source: Frost & Sullivan 18

18 Market Distribution Channels Key Takeaway: Partnerships with local distributors are preferred to increase presence in the market and to meet needs created by the demand for custom solutions. Total LTE Test Equipment Market: Distribution Channel Analysis, Latin America, % Indirect Sales (channel partners and specialty distributors) OEM Manufacturers 47.0% 29.3% Direct Sales Channel Partners: Assist in the distribution of OEMs products Specialty Distributors: Assist in the distribution of products as well as provide some technical training to customers End User Key: OEMs: Original Equipment Manufacturers Source: Frost & Sullivan 19

19 Market Distribution Channels (continued) Most LTE test equipment vendors serve the market through indirect sales channels, building strong relationships with key partners in the region, which have been a key strategy to enhance brand recognition and improve market position in Latin America. Leading companies are always working closely with a local partner in the Latin American region. Test equipment companies are establishing presence by building local strategic partners with a multiplied sales force. Leading testing organizations usually look for a partner with brand of excellence and reputation in the region that can offer local currency acceptance. These partners have an extensive knowledge of the local Latin American market with dedicated distribution channels, product sales, and local support. However, in certain key Latin American countries (e.g., Brazil and Mexico), sales are mostly made through direct sales rather than through distributors or value-added resellers. In 2012, companies such as Ascom established direct sales offices and direct local and language support in Brazil to serve its large customer base. For some leading test equipment vendors, such as Rohde & Schwarz and Anritsu, direct selling operations are more effective due to their focus on higher-end test equipment. Overall, distributors tend to provide the best market access. Market revenue is not significant enough to justify an operation in every Latin American country. However, in the next few years, test companies should not only focus on building strong partnerships with local distributors but should also aim to develop presence through local installation, direct support staff, and operation services within the entire region. Test equipment manufacturers seeking market success must offer devices that cover local needs. A keen understanding of such needs is expected to have a positive impact on the test equipment market and boost the share of test companies offering innovative products that address customer expectations. Source: Frost & Sullivan 20

20 Drivers and Restraints Total LTE Test Equipment Market Return to contents 21

21 Market Drivers Total LTE Test Equipment Market: Key Market Drivers, Latin America, Drivers 1 2 Years 3 4 Years 5th Year Increase of data traffic in the wireless operators backbone enables higher growth for the LTE test equipment market. H H H New spectrum frequency auction assignments and trials will drive demand for LTE test equipment. Increasing quality standards in Latin America boost the LTE test equipment market. The benchmarking programs required by regulators will enhance demand for LTE test equipment. The release of new technology will drive demand for LTE test equipment. The entrance of new operators and new agreements will impact the LTE test equipment market. The spectrum efficiency boosts LTE test equipment demand. H H H M H H M H H M H H M H H M H H Impact Ratings: H = High, M = Medium, L = Low Source: Frost & Sullivan 22

22 Drivers Explained Increase of Data Traffic in the Wireless Operators Backbone Enables Higher Growth for the LTE Test Equipment Market According to Cisco, mobile data traffic in Latin America grew 87% in 2014 compared to 2013, whereas Asia, North America, and Western Europe grew 69%, 63%, and 45%, respectively in Latin America is expected to achieve the third position globally in terms of mobile data traffic growth over the forecast period ( ). Data traffic in Latin America is expected to grow at a CAGR of 59% over the forecast period. Africa and Middle East are expected to grow at a CAGR of 72% and Central and Eastern Europe at a CAGR of 71% over the forecast period. According to Ericsson, in 2020, mobile data traffic in Latin America will rise up to 1.8 ExaBytes (EB). This will represents 6 times more than that of According to Cisco, mobile video data traffic will represent about 70% of total mobile data traffic in Latin America by Mobile operators require to test for QoS and QoE. The demand for analysis of this type is increasing in Latin America. Increasing mobile data usage generates more traffic on the network. The rise in mobile data use is leading to changes in the transmission pipeline. Even though voice is the biggest contributor to operators incomes, data is quickly gaining acceptance as a revenue source. Source: Cisco; Ericsson; Frost & Sullivan 23

23 Drivers Explained (continued) New Spectrum Frequency Auction Assignments and Trials will Drive Demand for LTE Test Equipment In most of Latin America, a wide range of radio frequency spectrum bands assignments and auctions from local governments is expected. Some of these frequency bands were originally planned for Wimax and UMCS. Latin American governments require several technical aspects for the assignment of diverse frequency bands. For example, in Colombia, the government requires 80 MB/s for downloads and 14 MB/s for uploads. Test equipment vendors have been required to support the combination of new spectrums across the region. Higher quality standards to support multi-technology networks (2G, 3G, LTE) in diverse frequency bands are becoming key requirements to succeed in the market. Major investments for mobile device test equipment and drive testers will come from LTE auctions and deployment in the 700 MHz spectrum. This band will enable operators to expand coverage rapidly. The APT 700 MHz spectrum band will have a greater number of devices and better economies of scale in the region over the forecast period. Countries such as Brazil, Mexico, Nicaragua, Panama, and Chile will lead the 700 MHz spectrum band adoption. A number of frequency bands spectrum auctions are expected to occur in Central America, which augurs well for test equipment vendors. Some of these auctions are delayed processes from According to 4G Americas, at least 26 pre-commitment LTE trials are expected for the next 5 years in 20 countries across Latin America. Source: 4G Americas; Frost & Sullivan 24

24 Drivers Explained (continued) Increasing Quality Standards in Latin America Boost the LTE Test Equipment Market Frost & Sullivan expects continued progress in network quality requirements that widely vary across the Latin American region. Some leading mobile operators across certain countries in Latin American, such as Colombia and Ecuador, are increasingly considering the quality of the network deployed and enhancing market growth opportunities for test equipment vendors. The demand for network testing that is driven by positive QoE is expected to continue to increase through the forecast period. Local governments are requiring investments in quality service programs to ensure the best quality in their respective countries. Local regulators are starting to push for higher quality standards required in countries across the region such as Chile and Mexico. The Benchmarking Programs Required by Regulators will Enhance Demand for LTE Test Equipment Benchmarking programs are used to measure and compare different operators performance in order to report and take action against those not utilizing or investing in the network frequency spectrum as it was originally requested. Some local regulators in Latin America such as Subtel in Chile and the Communications Regulation Commission in Colombia are using benchmarking programs to verify if operators spectrum performances meet the guidelines required by local regulators. Benchmarking programs can be different depending on local regulators requirements. Benchmarking can be in a fixed location, indoor or outdoor, for a drive test type of measurement. Source: 4G Americas; Frost & Sullivan 25

25 Drivers Explained (continued) The Release of New Technology will Drive Demand for LTE Test Equipment According to Cisco, 20% of Latin America s total technology installed base was dedicated to smart devices and connections in The percentage share of smart devices and connections in Latin America is expected to grow to 61% in According to BN Americas, a number of network providers are ready to offer VoLTE in Latin America. However, today, operators are compliant with letting OTT VoIP services attract sufficient potential subscribers of LTE technology. Mobile operators will be working with network suppliers for the initial deployment of VoLTE and carrier aggregation in Although, VoLTE and carrier aggregation have not yet been introduced commercially in the region, a number of strategic plans are expected to introduce these technologies and include them on operators LTE networks in Therefore, carrier aggregation and VoLTE with new functionalities require additional testing capabilities and performance indicators in the Latin American region. Leading test equipment companies are building their product portfolios with VoLTE as an important differentiator. Some scenarios for carrier aggregation are planned that have limited channels such as 850 MGHz. This plan will include combination bands in 3GPP. Growth is increasing for both the streaming video and machine to machine (M2M) market in the Latin American region. According to Ericsson, the region had near 20 million cellular M2M connections in According to leading network providers in the region, the first deployment of LTE-A in Latin America with limited size of scripts is expected to start in 2016 which augurs well for test equipment vendors. Key: OTT VoIP = over-the-top voice over Internet protocol Source: BN Americas; Cisco; Ericsson; Frost & Sullivan 26

26 Drivers Explained (continued) The Entrance of New Operators and New Agreements will Impact the LTE Test Equipment Market AT&T signed an agreement with Grupo Salinas on November 2014 to acquire Lusacell in Mexico. AT&T is planning to cover Lusacell s wireless network assets client base of 120 million people and expand new business and customers in Mexico. The impact of AT&T s 2014 entrance in Mexico will result in market growth opportunities for test equipment vendors throughout the forecast period. The acquisition of Lusacell creates the opportunity to establish the first-ever North American mobile service area in the entire Latin American region. AT&T is bringing the same US quality of network and customer experience to deploy world-class LTE mobile speed into the Mexican market, which bodes well for future LTE testing in the country. The Spectrum Efficiency Boosts LTE Test Equipment Demand In some Latin American countries, spectral efficiency is a driver of LTE adoption. High levels of congestion in frequency spectrum bands are found in densely populated urban areas. There are requirements to test spectrums to ensure band spectrum is clean first and then to check that hand over and radio access changes between the technology in different bands and new spectrums. Source: AT&T; Frost & Sullivan 27

27 Market Restraints Total LTE Test Equipment Market: Key Market Restraints, Latin America, Restraints 1 2 Years 3 4 Years 5th Year Price competition and budgets impact test equipment expenditure. Poor network quality and optimization solutions have led to lack of investment. H H H M M M Lack of education and training personnel hinders market growth. M M M Infrastructure regulation impacts capital expenditure. M M M Import restrictions slow the demand for LTE test equipment. M M M Impact Ratings: H = High, M = Medium, L = Low Source: Frost & Sullivan 28

28 Restraints Explained Price Competition and Budgets Impact Test Equipment Expenditure Despite the imminent trials and deployments of LTE in the region, a key challenge for test equipment companies is to sustain growth revenues in a market with huge price sensitivity in all levels of the industry. Mobile operators in the Latin American region are still reluctant to invest in new test equipment. Operators are tightening the budget in both CAPEX spending for new tools and ongoing OPEX spending on services. Investors in Latin America tend to be more cautious than in other developed regions. Customers in the Latin American region expect a very high return on their investment in a short period and to eliminate investments in networks in general. Therefore, delivering products in line with customers' demand for price sensitivity is still a challenge to succeeding in this competitive region. Poor Network Quality and Optimization Solutions have Led to Lack of Investment End users in the Latin American region have stated that drive testers fail from 30 40% of the time. Test equipment organizations usually underestimate the challenge of being successful in providing optimization solutions for network certification, which poses a significant challenge to operators device acceptance programs by optimizing parameters such as data throughput, impact of signaling, and radio performance. In Latin America, most of the current solutions offered across the region are focused on changing the existing networks instead of on providing real network optimization solutions. The current strategy in the region is favors expanding networks over optimizing them. The macroeconomic conditions in the Latin American region are impacting investment in quality programs. Major gaps exist between quality investments and organizational procedures that can lead to providing quality services to customers in Latin America. Source: Frost & Sullivan 29

29 Restraints Explained (continued) Lack of education and training personnel hinders market growth Historically, staff training has always been a budget problem in the Latin American region. A key restraint that operators usually underestimate is the successful education of their personnel in local services support. Mobile operators in the Latin American region are rather cost conscious and assume an essentials only attitude towards training. Latin American customers are starting to require a high level of specialized technical support. Both pre-sales and post-sales support is important to succeed in this developing market. However, there is still uncertainty in the region impacting capital expenditures and budgets for test equipment vendors dedicated to internal training programs and technical support. There is a shortage of qualified personnel, especially to support remote and rural areas where the latest mobile broadband technologies are needed. The lack of specialized personnel is a problem that could be seen over the next years across the region once mobile operators have covered urban and suburban areas across the region. This restraining factor will have a higher impact in countries with a complicated topography and with very low levels of purchasing power in Latin America. This is not a new restraining factor in Latin America and there is not an easy short-term solution. In such a scenario, companies that are able to offer comprehensive technical customer service focused on the end-user experience enjoy a better position to sustain and grow in a given market with high potential. Source: Frost & Sullivan 30

30 Restraints Explained (continued) Infrastructure Regulation Impacts Capital Expenditure Government infrastructure involves tight regulations pertaining to the deployment of antennas, towers, and fibers, which represents a major obstacle for the investment and deployment of LTE across the Latin American region. Regulations and taxes in Brazil is one example. A number of laws in Brazil surround approval for tower and radio allocation. Local regulatory bodies have been proactive in applying penalties in case of not meeting the contractually-bound performance. Explosion of wireless data usage brought on by smartphones put much strain on networks in Latin America in terms of quality. Primarily, the networks were not prepared for the growing data traffic. There are 2G and 3G networks required by local regulators that are difficult to accommodate on all existing spectrum technologies. This is restraining the deployment of LTE. Import Restrictions Slow the Demand for LTE Test Equipment In some Latin American countries, the rate of importing test equipment is extremely high. This could lead to slower adoption of LTE mobile services. In Argentina, Venezuela, and Ecuador some imports restrictions can be a big obstacle to introducing LTE test equipment. Also, restrictions can control the means to earn foreign exchange currency for the selling of test equipment. Source: Frost & Sullivan 31

31 Forecasts and Trends Total LTE Test Equipment Market Return to contents 32

32 Market Engineering Measurements Total LTE Test Equipment Market: Market Engineering Measurements, Latin America, 2014 Market Overview MEASUREMENT NAME MEASUREMENT TREND Market stage (nascent, growth, mature) Growth Market revenues (2014) $43.8 M Market size at end of forecast period (2019) $ 81.5 M Base year market growth rate 7.4% Compound annual growth rate (CAGR) 13.2% Customer price sensitivity (scale of 1 to 10, low to high) 8 Degree of technical change (scale of 1 to 10, low to high) 7 Market concentration (% of base year market controlled by top 3 competitors) 52.4% TREND Decreasing Stable Increasing Note: All figures are rounded. The base year is Source: Frost & Sullivan 33

33 Market Engineering Measurements (continued) Competitor Overview MEASUREMENT NAME MEASUREMENT TREND Number of competitors (active market competitors in base year) More than 15 Number of companies that exited in base year* 0 Number of companies that entered in base year* 0 Total Addressable Market Replacement rate (average period of unit replacement) 3-4 years Average Product Development Time 9-18 months Decreasing Stable Increasing *Note: Companies with more than $0.5 M revenue. All figures are rounded. The base year is Source: Frost & Sullivan 34

34 Forecast Assumptions According to the World Bank, growth in Latin America declined to 0.8% in 2014 due to a slowdown among trading partners and local tensions in the major regional economies. This represents the second-lowest growth within the last 12 years. Nevertheless, the Latin American GDP is forecast to increase to an average of 2.6% in Although Latin American economic development experienced a slowdown in growth, it experiences fresh headwinds on the road to sustainable medium term growth due to the number of increasing trials and planned deployment of LTE services in 2015 and The Latin American LTE test equipment market, in particular, is most affected by the political status of each country in terms of assignments and auctions of new spectrum band frequencies. Local governments are beginning to take steps to drive more competition in Latin America such as the entry of AT&T in Mexico which can be translated into more LTE test equipment sales in the coming years. Even though about 82 million mobile subscribers for LTE are expected in 2018 in Latin America, there are some concerns from leading test equipment vendors that the growth for test equipment will not correlate to the number of mobile subscribers growth. This is because that once a lot of operators in the Latin American region have a new spectrum assignment, they allocate their CAPEX budget to purchase testing tools at the beginning of the process and are fairly early to rollout LTE. As a general trend, mobile operators make an initial investment and buy a couple of testing products at the beginning of the LTE roll-out process, planning to use them over the next couple of years. Some of these investments have been already made in the region. Source: World Bank; Frost & Sullivan 35

35 Revenue ($ Million) Growth Rate (%) Revenue Forecast Key Takeaway: Starting in 2016, revenue growth becomes fueled by the 700 MHz frequency spectrum. Total LTE Test Equipment Market: Revenue Forecast, Latin America, Revenue CAGR, = 13.2% Revenue ($ M) Growth Rate (%) Year Note: All figures are rounded. The base year is Source: Frost & Sullivan 36

36 Revenue Forecast Discussion The total Latin American LTE test equipment market generated $43.8 million in revenue in 2014, growing at a single digit rate over the previous year. Frost & Sullivan believes the growth of test equipment tools will not increase in the same direction as LTE mobile subscribers growth in the region. There will be a sustained but moderate growth in the Latin American LTE test equipment market, picking up a low double-digit growth over the next few years. Overall market growth is expected to be stable, sustained, and moderate during the forecast period. Base year 2014 was a growth year for the LTE industry with a number of initial investments in LTE test equipment. However, the carriers are waiting for an increasing number and growth in LTE mobile subscriptions in order to start buying new test equipment. Frost & Sullivan does not expect significant growth of carriers investment for test equipment in Double-digit growth is expected from 2016 on. As more carriers launch LTE networks across the region, initial investment will be needed to change some specific test equipment from 3G to LTE. However, operators and carriers are expected to reuse the same test equipment for different frequencies moving forward. Frost & Sullivan expects continuous government band spectrum assignments, LTE trials, and upgrades from 3G technologies in 2015 to 2016, which augurs well for the LTE test equipment market. VoLTE and carrier aggregation are expected to be introduced commercially in the region. A number of strategic plans are expected to introduce them on operators LTE networks in the Latin American region in 2016 which will support the growth of the LTE test equipment market. The revenue limits will be based on the investments that network providers are willing to make and those in which the customer is willing to subscribe. Source: Frost & Sullivan 37

37 Pricing Trends and Forecast Discussion Frost & Sullivan expects more pricing pressure due to increased competition in the Latin American region throughout the forecast period. Some operators are trying to commoditize the product requirements and make them all the same. Operators want to reduce cost but not at the expense of quality. Therefore, price is very competitive in the region. Price competitiveness is aggressive in Latin America and the region s ARPU is lower than in more developed markets. Despite the imminent trials and deployments of LTE in the Latin American region, a key challenge for test equipment companies is to sustain growth revenues in a market with huge price sensitivity at all levels of the industry. In Latin America, price sensitivity is high due to the presence of Asia-Pacific operators, principally Huawei. They have increased pressure with influence at all levels of the industry across the region. Although signs indicate that economic improvements can be expected around the region, a lot of caution and uncertainty still abound concerning price and capital expenditures. Investors in Latin America tend to be more cautious than in other regions, and they expect a high return on their investment over a short period. Many customers across the Latin American region are complaining about their tight CAPEX budgets and are hesitant to make large investments at the moment. Source: Frost & Sullivan 38

38 Latin American Hot Spots Key Takeaway: Brazil, Mexico, and Colombia are the top 3 countries in the Latin American region, claiming 86% of total Latin American LTE mobile subscriptions. Mexico Mexico: 15% of total mobile LTE subscriptions in Latin America in 2014 LTE-1700/2100 AWS Spectrum 4 LTE networks deployed since July 2012 Colombia Colombia: 7% of total mobile LTE subscriptions in Latin America in LTE networks deployed since July 2012 Puerto Rico Puerto Rico: 2% of total mobile LTE subscriptions in Latin America in 2014 Venezuela Venezuela: 2% of total mobile LTE subscriptions in Latin America in 2014 Brazil Brazil: 64% of total mobile LTE subscriptions in Latin America in LTE networks deployed since December LTE networks to be deployed in 2015 Peru Peru: 2% of total mobile LTE subscriptions in Latin America in 2014 Chile Chile: 4% of total mobile LTE subscriptions in Latin America in 2014 Bolivia Bolivia: 3% of total mobile LTE subscriptions in Latin America in 2014 Source: 4G Americas; Frost & Sullivan 39

39 Latin American Hot Spots (continued) Key Takeaway: Total LTE mobile connections in Latin America reached 10.4 million in 2014 and will reach 82.0 million by LTE Test Equipment Market: LTE Subscriptions by Select Countries, Latin America, 2014 Brazil (6.7 million subscriptions) Mexico (1.6 million subscriptions) Colombia (808,762 subscriptions) Chile (345,396 subscriptions) Rest of Latin America (0.8 million subscriptions) LTE is seeing an accelerating uptake of LTE connections in Latin America. LTE will address the market requirements for the next decade in the region, and operators are likely to ultimately enhance their LTE networks for spectrum capabilities. Operators in the Latin American region are driven by the reduction of operating costs and savings in terms of spectrum. In 2019, 26.1% of total wireless connections in Latin America will come from LTE. 743 million total mobile subscriptions in Latin America 53 LTE networks launched in 21 countries in Latin America LTE represents 1.3% of total mobile subscriptions Source: 4G Americas; Frost & Sullivan 40

40 Latin American Revenue Forecast Discussion by Country Brazil and Mexico contributed 43.0% of the total revenue for LTE test equipment in Latin America and reached 18.8 million in Mexico led the market with $ 10.8 million and is expected to continue dominating the total LTE test equipment market throughout the forecast period. Mexico holds the number one position for renting options of test equipment across the region. The entrance of AT&T in the country is expected to create business opportunities for test equipment vendors in response to a number of quality standard requirements from local regulators in the forecast period. Brazil placed second in 2014 with an estimated 18.3% revenue contribution, amounting to $8.0 million. Brazil is much more focused on LTE test equipment for manufacturing than the rest of Latin America. Monitoring is seeing increasing activity, and small activity in R&D is increasingly occurring. In fact, some handset manufactures have set up engineering facilities for R&D since Brazil is followed by Colombia with 17.8% to the regional market revenue in LTE operators in Colombia received massive government care for quality standards to rapidly upgrade their telecommunication services for supporting LTE connection across the country. Colombia is focused on services within the installation and monitoring segment. In 2014, Chile accounted for 14.6% of the total LTE market revenue amounting to $6.4 million. The 700 MHz band spectrum is expected to have a number of opportunities for test equipment vendors. Chile has very few LTE test equipment activities in the manufacturing side and is more focused on services in installation and monitoring. In Argentina, with the new deployment of LTE in 2014, increasing LTE test equipment activities are expected in manufacturing and services. Source: Frost & Sullivan 41

41 Revenue ($ Million) Growth Rate (%) Revenue Forecast by Vertical Market Key Takeaway: Manufacturing and I&M will provide the most growth opportunities in the next 5 years. Total LTE Test Equipment Market: Revenue Forecast by Vertical Market, Latin America, CAGR, = 13.2% R&D Manufacturing I&M Monitoring Growth Rate (%) Note: All figures are rounded. The base year is Source: Frost & Sullivan 42

42 Revenue Forecast by Vertical Market Discussion In 2014, the manufacturing segment contributed the biggest market share, 53.8%, to the total LTE test equipment market in Latin America. By 2019, manufacturing is expected to account for 56.3% of the total revenue because more LTE devices will be made available in the region. As the number of live LTE networks increases, the need to monitor them is expected to increase as well. In 2014, the monitoring segment of the LTE test equipment market contributed the third portion, 19.1%, to the total market revenue. With a constantly increasing number of LTE networks, monitoring contribution is expected to increase to 19.4% in 2019, considering the necessity of monitoring end-user experience for SPs. I&M claimed 23.3% of the total market share in Its percentage is expected to increase because of more LTE deployments in the years to come across the Latin American region. R&D contributed 3.8% to the total LTE test equipment market revenue in A number of small R&D activities are expected in countries across the region, Brazil in particular. For example, CPqD, a Brazilian telecoms R&D company that is one of the largest in the region, launched LTE testing focused on the 450MHz spectrum for remote and uncovered areas. The lab is the first in the region for testing LTE terminals to support Wi-Fi networks and a network management system. Source: Frost & Sullivan 43

43 Market Share and Competitive Analysis Total LTE Test Equipment Market Return to contents 44

44 Market Share Key Takeaway: The Latin American LTE test equipment market is dominated by 3 leading companies with 52.4% market share. Total LTE Test Equipment Market: Percent Revenue Breakdown, Latin America, 2014 Others 28.7% Rohde& Schwarz 25.2% Anritsu 9.2% JDSU 9.7% Ascom Holding AG 11.6% Anite 15.6% Note: Others include Astellia, Actix, Aeroflex, DingLi, EXFO, Keysight Technologies, IXIA, Lightpointe, National Instruments, Spirent Communications. All figures are rounded. The base year is Source: Frost & Sullivan 45

45 Market Share Analysis The top 3 LTE test equipment market participants are expected to contribute 52.4% to the total market revenue in Rohde & Schwarz (R&S) continues as the market leader in the LTE test equipment industry, holding 25.2% share in R&S is also the top participant in the manufacturing segment, claims third position in drive testers, and the second for benchmarking in the region. The company offers one of the broadest product portfolios across R&D, manufacturing, I&M, and monitoring. The company maintains revenue growth because of its wide product line across all application segments in the product lifecycle for digital wireless communications, from protocol development and RF testing. R&S is focused on providing radio network analyzers for LTE-FDD and TD-LTE measurements. In fact, it has successfully introduced advanced portable instruments focused on interference discovery and band frequency spectrum clearing of LTE. In addition, a comprehensive drive tester and monitoring network analyzer has gained popularity. Moreover, the company has incorporated SwissQual AG product portfolio focused on the network benchmarking and network optimization, which are complementing R&S roaming and scanners across the region. Total LTE Test Equipment Market: Company Market Share Analysis of Top 5 Participants, Latin America, 2014 Company Revenue (%) Rohde & Schwarz 25.2 Anite 15.6 Ascom Holding AG 11.6 JDSU 9.7 Anritsu 9.2 Others 28.7 Total Note: Others include Astellia, Actix, Aeroflex, DingLi, EXFO, Keysight Technologies, IXIA, Lightpointe, National Instruments, Spirent Communications. All figures are rounded. The base year is Source: Frost & Sullivan 46

46 Market Share Analysis (continued) Anite PLC. took the second top market position, adding 15.6% to the overall Latin American LTE test equipment market revenues in Anite holds the number one position in terms of drive testing equipment and benchmarking market share. The company is focused on the I&M and monitoring segments and has maintained a top-line growth rate above the regional market average, accomplishing 25%. Annually, the company has sustained a double-digit revenue growth rate. This is attributable to Anite s efforts in the last few years to gain clients from its key regional competitors. Anite s Nemo product, for instance, is the most purchased testing tool by operators such as Ericsson in Latin America over the last years. New contracts and business opportunities are coming for Anite s benchmarking platforms based on requirements from national telecommunications regulation authorities. Anite has provided one of the most complete portfolios of testing products for LTE in the region, including scanners, collection software, and post-processing solutions based on drive test data. For example, Anite introduced WindCatcher, a post processing tool, for multi-format test environments and reporting. The company focuses on solutions for testing and monitoring end users QoE. In light of the industry s regional needs, Anite has introduced the Nemo Commander to conduct remote testing management in the field from several geographical distributions. Compared to several of its competitors, Anite is more focused on offering a centralized network measurement solution with data collected in real-time, remotely, and with reduced drive testing costs (about 40%). The idea is to help customers lower their costs by giving access to a remote and centralized platform. Moreover, Anite is one of the few companies in the region offering the opportunity to rent its entire LTE portfolio of testing products with local currency acceptance and local distributor partnerships. As a business philosophy, Anite always works closely with a local partner in the Latin American region. The company demonstrates unique understanding the local market needs for specific cases in which short projects with flexibility options are required. With profound expertise in LTE test equipment technology, Anite has built more than 11 strategic local partnerships in 21 countries in Central and South America. Source: Frost & Sullivan. 47

47 Market Share Analysis (continued) Ascom Holding AG came in third in the Latin American LTE test equipment market with 11.6% market share in Ascom holds second position in terms of drive testing equipment market share in the region. The company is focused on the I&M and monitoring segments with a combination of PC-based products, handheld products, report analysis, and benchmarking. The two main products of the company offers in Latin America are the TEMS Investigation and TEMS Pocket. TEMS Investigation is a PC-base tool used in pre-deployment during acceptance testing over the network deployment. It is also used in providing optimization for commercial networks. TEMS Pocket is based on a ultraportable smartphone test tool for indoor testing, rollout of small cells, and measurement of performance and quality parameters. These two products are very popular in the Latin American region, especially among operators during LTE commercial rollouts. These products have also gained regional popularity to test the interoperability between the new LTE technology and the legacy technologies (2G and 3G). Moreover, Ascom has introduced successfully TEMS Discovery, a post-processing analysis and reporting tool which gained popularity in recent years across the region. Ascom provides renting options through a key distributor based in the United Kingdom. JDS Uniphase Corporation came in fourth in the Latin American LTE test equipment market with a market share of 9.7% in JDSU holds the fourth position in terms of market share for drive testers in the region. The company is focused on the R&D and manufacturing of test equipment on the radio frequency (RF) side. JDSU holds the number one position in many fiber optics products, and has built its position in this area over many years in the Latin American region. Source: Frost & Sullivan 48

48 Market Share Analysis (continued) The company is focused on providing a new generation of LTE test equipment in the Latin American region based on a full-package solution that allows customers to perform testing of all the fiber, IP, and radio certification on site. JDSU offers a broad range of solutions including signaling tests and protocol analyzers that can be integrated to provide more visibility into the higher network layers. This test equipment is part of its platform for LTE that provides customer experience management. JDSU s testing products have the capabilities to monitor counter traffic on a 24x7 basis and provide KPIs based on customers needs to ensure the server is working. Moreover, the company has acquired Arieso, a mobility solutions provider. Arieso has been integrated into the JDSU product portfolio in Latin America to provide remote location intelligence to networks. This acquisition marks a key competitive differentiator in providing end-to end visibility for large deployments with the capability to offer location information of every user and server performance. Anritsu Company placed fifth with a 9.2% revenue contribution. The company has build its brand in the region on the radio troubleshooting side by offering a full line of test equipment for the analysis of LTE network performance and quality. The company offers a variety of test equipment that helps the developer, factory, and carrier-specific testing. The company offers LTE protocol test platforms and LTE base-station simulators on the R&D side. For manufacturing activities, the company is focused on providing a complete portfolio of products for simulating radio access and server functions, and for supporting legacy and LTE technology standards. Moreover, the company is well prepared to support the upcoming technologies in the region such as carrier aggregation with handheld products. The company is able to support 2CC, 3CC, 4CC, and all IMS services for testing. Source: Frost & Sullivan 49

49 Market Share Analysis (continued) The other notable market participants are Actix, Astellia, DingLi, EXFO, Ixia, Keysight Technologies, LightPointe, National Instruments, and Spirent Communications. Together they are estimated to have contributed 28.7% to the global market revenues in Actix, an Amdocs Group company, is focused on drive testers for network validation and optimization. The company has reduced the investment in its Actix Analyzer product which was competing directly in the benchmarking segment product tools across the region. Astellia is focused on providing an end-to-end probe-based solution for the next generation wireless networks focused on real-time monitoring and troubleshooting for LTE and legacy technologies in countries such as Mexico, Brazil, Peru, and Chile. The company has developed a full set of KPIs with plenty of telecom expertise in each of their tools that can identify troubleshooting root causes effectively. The NOVA platform is not only focused on providing analytical tools for the technical teams, but also for the marketing and sales teams inside organizations. The company has a good presence in the Caribbean region, where the decision process is much quicker compared to other regions in Latin America. DingLi Communications Corp., Ltd. is focused on the I&M and monitoring segments. DingLi, the market share leader for drive test solutions in China, joined the Latin American region, especially in Brazil in As part of its overall global strategy expansion, the company is growing its wide product portfolio, including drive test kit for LTE, handheld products, and real-time post-processing tools for LTE data to increase its market participation across the region. Source: Frost & Sullivan 50

50 Market Share Analysis (continued) The company has established some business in Argentina and Colombia. The company s Pilot Pioneer and Pilot Walktour products can be used through a number of different operating systems and smartphones. The company has been working closely with mobile operators and original equipment manufacturers (OEMs) to increase its business and support 4G (LTE-TDD & FDD) deployment in countries such as Brazil. On the service assurance side, IXIA has made significant contributions to the Latin American market focused on providing a real user experience. The company has introduced successfully into the region testing solutions to provide support across all phases of enodeb base station performance and LTE delivery scenarios. Keysight Technologies is bringing its expertise into the Latin American region as the global leader in mobile device testing with a strong focus on R&D. The company is a leading participant in the 2G and 3G mode and now is trying to recover market share space for LTE in the Latin American region. LightPointe has made significant inroads providing small cell backhaul in order to reduce interferences and crowding issues. National Instruments is focused on the high volume test for the manufacturing and R&D segments. NI has introduced into the Latin American market its global leadership focused on an open standard and PXI modular platform. NI s test equipment modularity and open standard allow coverage of all legacy technologies and 4G testing with the same test equipment. NI s test system adoption for open field-programmable gate arrays (FPGAs) can be reconfigured in software to support new standards. Source: Frost & Sullivan 51

51 Market Share Analysis (continued) NI instruments offer capabilities to cover testing from 65 MHz to 6 GHz band spectrum. NI s instrument flexibility and easy to update instrument with any significant investment make it attractive for end users across the region. Latin American users are able to update and proceed to other projects with NI s same core equipment. The company is not only focused on providing manufacturing testing for smartphones, tablets, and netbooks, but also for small cells, EnodeB, and the infrastructure part of the network. Moreover, in 2012, the company introduced successfully into the region the Vector Signal Transceiver ( VST). NI s VST is able to generate and analyze RF signals without the need of an additional generator to conduct LTE testing. Spirent Communications product portfolio has grown significantly in the past 18 months through acquisitions and the development of new products. The company offers the broadest product portfolio across R&D, manufacturing, I&M, and monitoring. Spirent supports carriers in designing and testing their networks. The acquisition of ProLab has increased Spirent s ability to deliver very realistic IMS testing. Spirent is able to accelerate time to market for the device side vendor. In the wireless business unit, Spirent s product line includes network emulators, GNSS testing solutions, and emerging services and validation. The company is also focused on providing user experience testing such as video quality, voice quality, data throughput, and battery life testing. In the network side, Spirent has acquired Mobilethink's Device Analytics into its product portfolio that allows carriers to recognize devices that come into their networks and properly configure them into the network. The company is focused on providing an analytics solution for live networks, which is called customer experience management (CEM), to allow operators end-to-end visibility of the network s health. Source: Frost & Sullivan 52

52 Competitive Environment Total LTE Test Equipment Market: Competitive Structure, Latin America, 2014 Number of Companies in the Market More than 15 companies Competitive Factors Key End-user Groups Price, quality, supporting of diverse frequency spectrums, supporting of VoLTE, and carrier aggregation, and distribution channels SPs, NEMs, enterprises Major Market Participants Rohde & Schwarz, Anite, Ascom, JDSU, and Anritsu Market Share of Top 3 Competitors 52.4% Other Notable Market Participants Astellia, Actix, Aeroflex, DingLi, EXFO, Ixia, Keysight Technologies, LightPointe, National Instruments, and Spirent Communications Distribution Structure Direct sales, indirect sales (channel partners and specialty distributors) Source: Frost & Sullivan 53

53 Top Competitors Total LTE Test Equipment Market: SWOT Analysis, Latin America, 2014 Company Strengths Weaknesses Opportunities Threats Large investment in and commitment to R&D Still needs to build brand recognition in Latin America Continuous introduction of new products Increasing price sensitivity in all market segments in Latin America Testing throughput and GPS mobile access; Full rent capabilities for all test equipment for shortterm project periods; Customer-centric and enduser QoE strategies Still needs to build brand recognition in Latin America New agreements with leading operators across the Latin America region Increasing price sensitivity in all market segments in Latin America Broadest product portfolio focused on PC-based, handheld, and reporting test tools to support different aspects of operators life cycle in LTE rollout Framework issues when it comes to throughput testing with category terminals 4 or 6 Secured agreement with Apple to use the iphones as testing devices Lack of investment in infrastructure; From end-user standpoint market very price competitive Source: Frost & Sullivan 54

54 Top Competitors (continued) Total LTE Test Equipment Market: SWOT Analysis, Latin America, 2014 Company Strengths Weaknesses Opportunities Threats Diversification of its line products across all application segments for digital wireless communications and RF testing; Strong brand name recognition Challenge to tackle the LA market with headquarters in Europe Regulatory bodies increasing quality standards Strong competitive pressures from new entrees from Asia-Pacific region Build its position in the fiber optics area; End-to end visibility for large deployments; Provides remote location intelligence to networks Weak return on equity New agreements with leading operators across the Latin American region Increasing price sensitivity in all market segments in Latin America Source: Frost & Sullivan 55

55 New Entrees in the Latin American region Total LTE Test Equipment Market: SWOT Analysis, Latin America, 2014 Company Strengths Weaknesses Opportunities Threats Lower operating costs and pricing offers; Drive test and handheld products compatible with a number of smartphones Still needs to build brand recognition in Latin America; Very few contracts in the region, mainly with Claro Increasing price sensitivity in all market segments in Latin America Strong competitive pressures from leading participants with a consolidated customer base across the region Source: Frost & Sullivan 56

56 Product Highlights Total LTE Test Equipment Market: Top Company Product Highlights, Latin America, 2014 Company Actix Aeroflex Anite Anritsu Ascom Astellia DingLi EXFO IXIA JDSU Recent Product Introductions/Product Portfolio Actix Analyzer TM500 LTE-A, E500 Capacity Test System Nemo Comander, Nemo Handy, Nemo Outdoor, Nemo Invex Travel Pro, Nemo CEM, Nemo Walker Air MD8430A Signaling Tester, MT8820C One-box Tester, ME7873L RF/RRM, MS269xA Signal Analyzer, MG3710A Vector Signal Generator, MF6900A Fading Simulator, MD8475A Network Simulator, SmartStudio, ME7834L ME7873L LTE RF Conformance Test System TEMS investigation, TEMS Pocket, TEMS Discovery Network & Subscriber intelligence, NOVA Pilot Pioneer, Pilot Walktour, Pilot Navigator M5 Analyzer, Power Hawk Pro, TravelHawk, Quality Assurer Series, DuoSim, BrixNGN, BrixCall, EthernetOne, Backhaul Tri-Pak IxLoad Access RANAdvisor, Xsight, JD745B, JD785B, JDSU Ethernet Mobile Backhaul Solution, JDSU Signaling Analyzer Real Time Source: Frost & Sullivan 57

57 Product Highlights (continued) Total LTE Test Equipment Market: Top Company Product Highlights, Latin America, 2014 Company Keysight Technologies LightPointe National Instruments Rohde & Schwarz Spirent Communications Recent Product Introductions/Product Portfolio W1918 LTE-A Baseband Verification Library, LTE-A Signal Studio Software, LTE-A 89600B Vector Signal Analysis Software, E7515A UXM, M9393A PXIe Performance Vector Signal Analyzer, E6640A, M9381A, M9391A, M9080B AireStrata G, AireBeam Series & Aire X-Stream Series Vector Signal Transceiver, LabView, NI LTE Measurement Suite, NI Cellular Test System, NI LTE Toolkit R&S PR100 Series, R&S SMW200A Vector Signal Analyzer, R&S FSW Signal and Spectrum Analyzer, R&S CMW500, R&S TSMW Universal Radio Network Analyzer, R&S TSME Ultracompact Drive Test Scanner and R&S ROMES4 CS8 Mobile Device Tester, VR5 HD Spatial Channel Emulator, Spirent's 8100 system, Spirent E2010S, Spirent ProLab, Spirent Wireless Test Station, itest and Velocity, LandSilde, CEM (Customer Experience Management) Source: Frost & Sullivan 58

58 Upcoming Companies and Products to Watch Protocol Layer Analysis LTE RAN Mobile Video Traffic 1.Prismas UeSIM single platform and modular configuration can implement solutions for 2G, 3G, and 4G radio standards without buying additional new systems. 2. A very easy to use graphical user interface defines the workflow for all protocol layers with the definition of terminals, frequency bands, number of antennas, voice, and data capabilities for the simulation. 3. It allows focusing on the application layer and verifying the performance for application protocols or VoLTE. 4. Based on the price and performance value offered, UeSIM has been selected and replaced several of its key competitors in Europe and other regions. 1. Artiza can simulate up to 1,000 users equipment when compared to competitors' testers capable of supporting 200 to 400 UEs maximum. 2. Artiza's Advanced C-RAN Test Solution is scalable to accommodate several LTE carriers up to 100 MHz bandwidth within a single cloudbased state-of-the-art architecture, backed by the effective arrangement of small add-on and macro cells. 3. Terminal side (Uu-interface) and the core-network side (S1/X2- interface) simulators are integrated into one chassis. 4. Support of LTE-A feature testing includes centralized-radio access network (C-RAN). 1. Avvasi Q-VUE has the unique capability to bring broadcast video analysis, QoE measurement, and analytics into the packet core that can scale with the data traffic and accuracy to measure premium services. 2. Avvasi s product is very much focused on network optimization and actionable analytics. 3. It focuses on every single packet at real-time and reconstructs the flow into a media session. 4. Q-VUE looks deeper into the layer seven and visual quality with 90% accuracy. Source: Frost & Sullivan 59

59 Competitive Factors and Assessment Leading LTE test equipment products are focused on the user interface providing in-depth benchmarking and reporting analysis with fully customizable and best-in-class data and key performance indicators with high value to provide real end-user QoS and QoE. Leading LTE test equipment products are focused on enhancing network quality optimization, diagnostic, and troubleshooting capabilities. Leading LTE test equipment products are very focused on offering a centralized network measurement solution with data collected in real-time, remotely, and reducing drive testing cost. Leading LTE test equipment products are providing support for any major wireless technology in the region, including diverse frequency bands and interoperability with legacy 2G and 3G network technologies. Leading companies are focusing on providing rental services of test equipment across the Latin American region. Leading companies has demonstrated unique capabilities in understanding the local market needs for specific cases where it is required to conduct projects for 2 or 3 months in the region with flexibility options. Leading LTE test equipment companies have been very flexible in their offerings for short-term leasing options. Some of the available options are rental and lease, including a 1-year license to meet the various regional requirements. For software-based solutions, licenses can be activated on a time basis much more than for a hardware type of testing product. However, even for the hardware type of testing product, companies are offering rental and lease when appropriate. Source: Frost & Sullivan 60

60 Competitive Factors and Assessment (continued) Some leading participants in the region find it difficult to handle risks associated with short-term contracts. Leading organizations provide a solution that fits various organizations. The unique flexibility for renting proposition using local currency and local distributor partnerships differentiate leading companies from other participants in the region. The knowledge to deal with local custom houses is required. Leading LTE test equipment providers focus on increasing budget for training programs, specialized customer service, and technical support to ensure quality of services. Ensuring a reliable service quality across the Latin American region when new technologies such as VoLTE, and carrier aggregation are planned for commercial introduction is a key competitive differentiator. Leading test equipment companies in the Latin American region focus on providing a best-in-class customer purchase experience to end users by offering product demonstrations and flexible trial time period of up to 2 weeks. In some cases, leading test equipment vendors have replaced and exchanged previous 2G and 3G technology from customers with new 4G technology support. These are not considered isolated cases but long-term relationships that are part of company s regional sales strategy. Leading test equipment companies in the Latin American region offer a wide product portfolio, including portable handheld test tools for wide frequency spectrums. Test equipment vendors have been working with several phone manufacturers to ensure they have the broadest availability of testing for smartphone devices. Source: Frost & Sullivan 61

61 Mega Trends and Industry Convergence Implications Return to contents 62

62 Impact of Global Communications Test Mega Trends on the Latin American LTE Test Equipment Market Virtualization Virtualizing an infrastructure brings significant cost savings, and so most test solutions will be virtualized by More than 70% of test equipment will be virtualized and software defined in 2020.The virtualized IP testing market is expected to erode the market share of proprietary hardware-based test solutions. Big Data The Big Data explosion is fueled by the convergence of a variety of technological domains, as well as the higher degree in proliferation of the Internet of Things. Although platforms that enable the retention of copious amounts of data are being developed, the ability to perform a deeper analysis and accurately capture a specific type of transaction is proving to be very difficult for legacy infrastructure management systems. More sophisticated data analytic capabilities will grow as the magnitude of digital data increases in the years ahead. Connected Living The increasing complexity of integrated smart consumer devices will require testing to be integrated earlier in the product lifecycle. Test equipment will be playing a crucial part in the M2M applications in The M2M communications testing market will witness more functional testing at the chipset level as well as at the device level. In R&D and manufacturing applications, wireless test beds and one-box testers will witness a surge in demand. The demand for monitoring solutions is expected to increase as well, and more monitoring probes will be integrated into the actual communications equipment. Source: Frost & Sullivan 63

63 Mega Trend Impact on the Latin American LTE Test Equipment Market Key Takeaway: Megatrends 2 and 3 have been embraced by market leaders. Total LTE Test Equipment Market: Mega Trend Impact, Latin America, Mega Trend Degree of Impact Impact Timing Virtualization 8 2+ years Big Data 7 Present Connected Living 7 Present Impact Ratings: 7 10 = High; 4 6 = Medium; 1 3 = Low Source: Frost & Sullivan 64

64 Virtualization Mega Trend Explained Virtualization enables physical server resources (processor and memory) to be dynamically allocated among multiple applications and workloads. In a virtualized environment, applications are deployed as all-inclusive virtual machines (VMs) that contain application code, operating system, and configuration in a self-contained package. Because the operating and deployment logic reside with the application code, rather than installed separately on the server, the VM can be moved and loaded onto any hypervisor-equipped server hardware, via a management console, as easily as moving a file. For many companies, the largest benefit of server virtualization that allows multiple operating systems to be installed on a single server is reduction of the amount of hardware required to run all the software necessitated by the business. Consolidating servers using a virtualization process not only provides savings in terms of how many physical machines must be bought and maintained, but also potentially reduces the amount of physical space that a company needs for its servers or data center. As the virtualization trend continues to penetrate the industry, the need to test different elements of virtualized environments is increasing as well, thus, creating opportunities for test vendors. The key advantages of virtualized testing products include low cost of ownership, flexibility, and customization. Source: Frost & Sullivan 65

65 Big Data Mega Trend Explained Digital content is doubling every 18 months, and 90% of global data today has been created in the last 2 years alone. Higher degree of mobility, cloud computing, virtualization, social and digital media are fueling the growth of Big Data. Due to mobility, Big Data, and cloud migration trends, application performance management (APM) solutions will be integrated with IT equipment in Mobile security concerns for Big Data drive the demand for test equipment. With next generation networks comes more bandwidth, and more bandwidth presents greater possibilities of security breaches across the board. Encryption of data in transit, remote data wipe, device tracking, data backup, cloud storage as a service, and mobile device management (MDM) have become must haves for mobile users. Source: Frost & Sullivan 66

66 Connected Living Mega Trend Explained Connected Living describes a world in which consumers use many different devices to experience compelling new services that integrate video, voice, and data to provide access and ubiquitous connectivity anytime and anywhere. Widespread connectivity is expected to unleash a new breed of connectivity-enabled solutions, including new product applications, business models, technologies, and platforms and services. Digital solutions for a connected life are expected to create a market potential of $ billion by By 2020, there will be 80 billion connected devices worldwide. The Connected Living Mega Trend is expected to influence the test equipment market greatly in 2020 and offer numerous opportunities to testing vendors. M2M communications form an essential step to the dream of a ubiquitously connected world. Especially with the advent of satellite-based M2M, always-connected world is expected to soon become a reality. Advances in ubiquitous computing, especially ubiquitous sensor networks that play a major role in the growth of a well-connected globe, are likely to be made possible by M2M. This would lead to more devices being connected through M2M technology, which would result in increased testing of such devices. Source: Frost & Sullivan 67

67 CEO s 360 Degree Perspective on the LTE Test Equipment Market Return to contents 68

68 CEO s 360 Degree Perspective Key Takeaway: The integrated industry perspective is typically ignored by companies in the Latin American test equipment industry, and this is done so at their extreme peril. Total LTE Test Equipment Market: CEO s 360 Degree Perspective, Latin America, 2014 Perspective Competitive Personnel Economic Best Practices Issues Solutions focus mainly on changing the existing networks entirely, instead of providing real network optimization solutions. The strategy in the Latin American region still focuses on expanding rather than optimizing networks. The LTE market needs a shift in mentality, that is professionals who have a comprehensive understanding of operators local needs in the Latin American region. Growth revenues must be sustained in a market with huge price sensitivity at all levels of the industry. Uncertainty in the region still influences capital expenditures and budgets on test equipment vendors for internal training programs and technical support. Test equipment providers in the region are cost conscious and thus have an essentials-only attitude toward training budgets. Local training for technical support across all portfolios of testing solutions should be provided. The same person who facilitates the training in a few cases also provides local support and customer service to operators local needs. Source: Frost & Sullivan 69

69 CEO s 360 Degree Perspective (continued) One-stop-shop investment to offer all test deployments from a single source Best Practices Growth, Innovation, and Leadership User Interface Provide in-depth benchmarking and reporting analysis with fully customizable and best-in-class data views. Provide network-quality optimization, diagnostic and troubleshooting capabilities. Centralized Network Measurement Give access to a remote and centralized platform. Conduct remote testing management in the field from several geographical distributions. Offer a centralized network measurement solution with data collected remotely in real time, reducing drive-testing cost. Get mobile access to throughput data and GPS to identify rootcause. Real End-user QoS and QoE Provide acceptance programs by optimizing parameters such as data throughput, impact of signaling, and radio performance focused on providing real network optimization solutions. Provide a holistic view of the service quality in the network with the ability to capture information from several network technologies. Source: Frost & Sullivan 70

70 CEO s 360 Degree Perspective (continued) One-stop-shop investment to offer all test deployments from a single source Best Practices Growth, Innovation, and Leadership Strive for Excellence in Customer Purchase Experience Follow the customer life cycle faithfully. Adjust product offerings depending on country characteristics. Investment in both pre-sales and post-sales support. Support customers in multiple languages. Provide product demonstrations and flexible trial time period. Provide customer education trainings and certification programs. Provide rental services to handle the risks associated with shortterm contracts. Local Partnerships Work closely with a local partner in the region not only focused on providing local sales, but also providing local sales support. Look for partners with brand of excellence in the region with dedicated distribution channels, local currency acceptance, product sales, local support, and deep knowledge of treatment with local custom houses. Increase brand equity in the region through selected local sales partners who have a comprehensive understanding of operators needs and offer annual maintenance contracts Educating Personnel for Services Support Focus on internal trainings for high level of specialized technical support. Invest in both pre-sales and post-sales support. Source: Frost & Sullivan 71

71 CEO s 360 Degree Perspective (continued) Key Takeaway: The 700 MHz frequency spectrum is expected to rapidly develop and enhance coverage in regional and rural areas of Brazil and Mexico in Total LTE Test Equipment Market: 700 MHz band Characteristics and Benefits, Latin America, 2014 Increased Coverage Cost effectiveness Interference Protection 700 MHz Addressable Population Wider Bandwidths Availability Full Device Interoperability 700 MHz Frequency Spectrum The combination of low and high band spectrums such as the 700 MHz and 2500 MHz will allow operators to increase coverage in densely populated urban and rural areas. The 700 MHz band is much more significant for cost and capital reductions with the need for less equipment to cover the same area as the 2500 MHz spectrum band. The 700 MHz band offers greater mobile broadband capacity and/or competition. The 700 MHz band offers extended ecosystem and enhanced roaming capability. The 700 MHz band offers an extensive bandwidth for larger data capability for each network (Up to 2 x 20MHz). The 700 MHz band offers full device interoperability and support across the entire band. Source: Ericsson; Frost & Sullivan 72

72 CEO s 360 Degree Perspective (continued) The 700 MHz band will be a trigger for LTE adoption in Latin America as a standard for terminals. This will cause significant price drops and faster and more efficient deployment into urban and rural areas. The allocation of 700 MHz band spectrum is delayed by several governments in countries across Latin America. The 700 MHz band has postponements due to delays in the transmission of digital television. Some restrictions determine when operators will receive the 700 MHz band spectrum cleared from governments in the region. According to 4G Americas, the 700 MHz band will not be commercially available in Brazil and Mexico until The 700 MHz band identified as APT does not yet have a commercial release in the region. Only Bolivia and Puerto Rico have commercial networks in the 700 MHz band using US pipeline instead of APT. Frost & Sullivan expects a 3-digit growth for the 700 MHz band frequency adoption considering the increasing number of networks, number of countries, and coverage that will have these networks in the region. There were several auctions (most of them in band 28) from local governments in Chile, Colombia, Brazil, and Mexico in Argentina s government is planned to auction LTE in the 700 MHz band spectrum in Test equipment vendors are building their product portfolios to support the upcoming band 28 cellular band through PC-based and handheld testing solutions to ensure there are no interferences on the spectrum band to be deployed. Frost & Sullivan expects increasing demand based on the new 700 MHz spectrum for the drive testing business. APT 700 MHz is expected to witness a greater number of devices and better economies of scale for this technology moving forward across the region. Source: Frost & Sullivan 73

73 Research and Development Segment Return to contents 74

74 Research and Development Segment Key Findings Key Takeaway: The R&D segment hold the lowest market share in terms of revenues contribution for the LTE test equipment market in Latin America. Important Segment Characteristics Factors Assessment Trend Opportunity size ($ M)* 1.7 Research and Development Segment: Percent Revenue Breakdown, Latin America, 2014 Primary needs Price, quality, supporting of diverse frequency spectrums, technology features, services, and support Monitoring 19.1% R&D 3.8% Price sensitivity 7 Purchase influencers 7 Distribution structure Direct sales/ distributors Demand for innovation 7 I&M 23.3% Manufacturing 53.8% Decreasing Stable Increasing *Note: Opportunity size is comprised of All figures are rounded. The base year is Source: Frost & Sullivan 75

75 Market Engineering Measurements Research & Development Segment: Market Engineering Measurements, Latin America, 2014 Measurement Name Measurement Trend Segment stage Nascent - Segment revenue (2014) $1.7 M Segment forecast (2019) $3.7M Base year segment growth rate 29.4% Compound annual growth rate (CAGR, ) 17.5% - Price sensitivity (scale of 1 to 10, low to high) 7 Number of competitors (active market competitors in base year) 8 Degree of competition (scale of 1 to 10, low to high) 7 Degree of technical change (scale of 1 to 10, low to high) 7 Customer loyalty (scale of 1 to 10, low to high) 6 Decreasing Stable Increasing Note: All figures are rounded. The base year is Source: Frost & Sullivan 76

76 Revenue ($ Million) Growth Rate (%) Revenue Forecast Key Takeaway: Minimal activity and moderate growth in R&D is expected across the Latin American region Research & Development Segment: Revenue Forecast, Latin America, Revenue CAGR, = 17.5% Revenue ($ M) Growth Rate (%) Year Note: All figures are rounded. The base year is Source: Frost & Sullivan 77

77 Revenue Forecast Discussion The R&D test equipment market segment includes RF generators, RF analyzers, load/functional testers, and protocol analyzers, which are used in research laboratories during the pre-deployment stage. Conformance or certification testers are also included in this section of the study. Such solutions are used to test protocol implementation and to ensure that equipment conforms to standards. In 2014, the R&D segment contributed the lowest share in the region. As the market is still in a nascent stage, the R&D segment accounted for 3.8% of the total LTE test equipment revenue. By 2019, R&D is expected to account for only 4.5% of the total revenue because, as the market matures, more revenue is expected to come from the manufacturing, I&M, and monitoring segments of the Latin American LTE test equipment market. In most cases because of the time to the market and the outsourcing of deployment to the NEM there is less investment in an operator s end-lab. The lack of investment trend will increase for LTE with the replication of the network test in the lab environment. Overall, a limited number of activities in the R&D side is expected across the Latin American region. CPqD, a Brazilian telecoms R&D company that is one of the largest in the region, launched LTE testing focused on the 450MHz spectrum for remote and uncovered areas. The lab is the first in the region for testing LTE terminals to support Wi-Fi networks and network management system. Source: Frost & Sullivan 78

78 Manufacturing Segment Return to contents 79

79 Manufacturing Segment Key Findings Key Takeaway: The manufacturing segment holds the largest revenue share for the LTE test equipment market in Latin America. Important Segment Characteristics Factors Assessment Trend Manufacturing Segment: Percent Revenue Breakdown, Latin America, 2014 Opportunity size ($ M)* 23.6 Primary needs Price, performance and capacity testing for integrated voice, video, and data Price sensitivity 8 Purchase influencers 8 Monitoring 19.1% R&D 3.8% Distribution structure Direct sales/ distributors Demand for innovation 7 I&M 23.3% Manufacturing 53.8% Decreasing Stable Increasing *Note: Opportunity size is comprised of All figures are rounded. The base year is Source: Frost & Sullivan 80

80 Market Engineering Measurements Manufacturing Segment: Market Engineering Measurements, Latin America, 2014 Measurement Name Measurement Trend Segment stage Growth - Segment revenue (2014) $23.6 M Segment forecast (2019) $45.9 M Base year segment growth rate 7.9% Compound annual growth rate (CAGR, ) 14.3% - Price sensitivity (scale of 1 to 10, low to high) 8 Number of competitors (active market competitors in base year) 8 Degree of competition (scale of 1 to 10, low to high) 8 Degree of technical change (scale of 1 to 10, low to high) 7 Customer loyalty (scale of 1 to 10, low to high) 7 Decreasing Stable Increasing Note: All figures are rounded. The base year is Source: Frost & Sullivan 81

81 Revenue ($ Million) Growth Rate (%) Revenue Forecast Key Takeaway: Manufacturing offers tremendous opportunities for test equipment vendors as more LTE mobile deployments are imminent in the coming years across the entire region Manufacturing Segment: Revenue Forecast, Latin America, Revenue CAGR, = 14.3% Revenue ($ M) Growth Rate (%) Year Note: All figures are rounded. The base year is Source: Frost & Sullivan 82

82 Revenue Forecast Discussion Systems used to test mobile user equipment and services are included in this segment. They include bench-top as well as single-box testing systems, which are used to test the performance, protocol, and capability of cellular access devices, such as cell phones and smartphones, as well as connected devices, such as laptops, netbooks, notebooks, tablets, and wireless-enabled PDAs. In 2014, the manufacturing segment contributed the largest market share in the region in terms of revenues contribution with $ 23.6 million. The manufacturing segment contributed 53.8% to the total market revenue in However, it is expected to account for 56.3% in 2019 as more LTE devices will become available. Using multiple test equipment to test various technologies is proving to be an expensive proposition for mobile handset manufacturers, and many of the leading test equipment manufacturers have started to focus on developing modular test solutions that reduce the cost and time needed to test different technologies. Revenues will come from customers looking for flexibility and a long-term platform to support several standards and frequency band spectrums through the same test equipment. End users are looking to support MIMO and capabilities to reduce the throughput and testing time. Performance and capacity testing as well as evaluating how well a network handles integrated voice, video, and data are driving the demand for these test products. Source: Frost & Sullivan 83

83 Installation and Maintenance Segment Return to contents 84

84 Installation and Maintenance Segment Key Findings Key Takeaway: The I&M segment hold the second largest share of revenues for the LTE test equipment market in Latin America. Important Segment Characteristics Factors Assessment Trend Opportunity size ($ M)* 10.2 Primary needs Price, quality, supporting of diverse frequency spectrums, technology features, services, and support Installation & Maintenance Segment: Percent Revenue Breakdown, Latin America, 2014 Monitoring 19.1% R&D 3.8% Price sensitivity 8 Purchase influencers 8 Distribution structure Direct sales/ distributors Demand for innovation 7 I&M 23.3% Manufacturing 53.8% Decreasing Stable Increasing *Note: Opportunity size is comprised of All figures are rounded. The base year is Source: Frost & Sullivan 85

85 Market Engineering Measurements Installation & Maintenance Segment: Market Engineering Measurements, Latin America, 2014 Measurement Name Measurement Trend Segment stage Growth - Segment revenue (2014) $10.2 M Segment forecast (2019) $16.1 M Base year segment growth rate 3.4% Compound annual growth rate (CAGR, ) 9.5% - Price sensitivity (scale of 1 to 10, low to high) 8 Number of competitors (active market competitors in base year) 6 Degree of competition (scale of 1 to 10, low to high) 7 Degree of technical change (scale of 1 to 10, low to high) 7 Customer loyalty (scale of 1 to 10, low to high) 7 Decreasing Stable Increasing Note: All figures are rounded. The base year is Source: Frost & Sullivan 86

86 Revenue ($ Million) Growth Rate (%) Revenue Forecast Key Takeaway: Revenues will come from handset products such as smartphones that allow end users to collect QoE data. Installation & Maintenance Segment: Revenue Forecast, Latin America, Revenue CAGR, = 9.5% Revenue ($ M) Growth Rate (%) Year Note: All figures are rounded. The base year is Source: Frost & Sullivan 87

87 Revenue Forecast Discussion I&M test equipment primarily comprises RF handheld instruments for problem troubleshooting and the maintenance of wireless base stations and repeaters. Access networks, air interfaces, base station testers, drive testers, and network performance test equipment are also included. In 2014, the I&M application segment generated a revenue of $10.2 million, and it is expected to reach $16.1 million in 2019, growing at a CAGR of 9.5% from 2014 to Drive testers are expected to show a lower growth rate compared to other segments in the LTE test equipment market as long as the number of LTE subscriptions remain tiny across the Latin American region. While an increase in the complexity of networks and their related equipment brings about a variety of challenges for field technicians, it also translates into better opportunities for test equipment vendors, and one such opportunity is conformance testing. While most conformance testing is conducted in a lab-controlled environment, devices must also be brought out into the field to ensure that telecommunications equipment operates properly and that customers are receiving high-quality services. Product integration has become an ongoing trend in the communication I&M industry as more and more features have been added to the testing solutions. Because I&M uses handheld field instruments with integrated features for LTE, these instruments have become smarter, lighter, and smaller. Revenues will come from handset products such as smartphones that allow end users to collect QoE data. The focus of network operators will be not only on measuring RF performance, but also on testing real QoE and the integration with VoLTE and video streaming into testers. Source: Frost & Sullivan 88

88 Monitoring Segment Return to contents 89

89 Monitoring Segment Key Findings Key Takeaway: The monitoring segment holds the third largest market share revenues contribution for the LTE test equipment market in Latin America. Important Segment Characteristics Factors Assessment Trend Opportunity size ($ M)* 8.4 Monitoring Segment: Percent Revenue Breakdown, Latin America, 2014 Primary needs Price, quality, supporting of diverse frequency spectrums, technology features, services, and support Monitoring 19.1% R&D 3.8% Price sensitivity 8 Purchase influencers 8 Distribution structure Direct sales/ distributors Demand for innovation 7 I&M 23.3% Manufacturing 53.8% Decreasing Stable Increasing *Note: Opportunity size is comprised of All figures are rounded. The base year is Source: Frost & Sullivan 90

90 Market Engineering Measurements Monitoring Segment: Market Engineering Measurements, Latin America, 2014 Measurement Name Measurement Trend Segment stage Growth - Segment revenue (2014) $8.4 M Segment forecast (2019) $15.8 M Base year segment growth rate 7.4% Compound annual growth rate (CAGR, ) 13.6% - Price sensitivity (scale of 1 to 10, low to high) 8 Number of competitors (active market competitors in base year) 6 Degree of competition (scale of 1 to 10, low to high) 7 Degree of technical change (scale of 1 to 10, low to high) 7 Customer loyalty (scale of 1 to 10, low to high) 6 Decreasing Stable Increasing Note: All figures are rounded. The base year is Source: Frost & Sullivan 91

91 Revenue ($ Million) Growth Rate (%) Revenue Forecast Key Takeaway: Revenues contribution will come from testing and monitoring end-user QoE Monitoring Segment: Revenue Forecast, Latin America, Revenue CAGR, = 13.6% Revenue ($ M) Growth Rate (%) Year Note: All figures are rounded. The base year is Source: Frost & Sullivan 92

92 Revenue Forecast Discussion Network monitoring systems include both probe-based and software-based solutions that deliver endto-end QoS and QoE visibility as well as real-time IP service monitoring and verification. Monitoring protocol analyzers and active and passive monitoring systems are also included. In 2014, the network monitoring application segment generated a revenue of $8.4 million, and it is expected to reach $15.8 million in 2019, growing at a CAGR of 13.6% from 2014 to Due to pressure from local regulators to carriers in selected countries in the region, growth and business opportunities are growing for benchmarking tools. Increasingly, monitoring solution providers are integrating their solutions with analytics. These solutions help network operators with business-oriented performance dashboards and multi-dimensional analytics for network equipment efficiency, subscriber usage, handset performance, and mobile application usage. The need for monitoring is increasing, and more end users understand its importance. Monitoring is key to ensuring that there is a smooth and efficient flow of data across the network. Revenues contribution will come from testing and monitoring end-user QoE. Leading participants will be focused on improving the user interface and providing in-depth benchmarking and reporting analysis with fully customizable and best-in-class data views. Better monitoring solutions with Web-based applications are making CEM easier for network operators. Next-generation 4G/LTE mobile communication requires smoother and faster transitions across networks, and when working in a multi-vendor environment, interoperability testing is key. Moreover, growth in the use of smartphones, tablets, notebooks, and other smart devices requires high bandwidth, and this is driving the growth of network monitoring systems. Source: Frost & Sullivan 93

93 Country Analysis Return to contents 94

94 Mexico Key Findings Mexico holds the second largest portion of LTE mobile deployment in Latin American with a total market share of 15% and 1.6 million of LTE subscriptions in For LTE test equipment sales and renting options in particular, Mexico the holds number one position across the region. Mexico has the advantage to serve the US market with access to new telecommunication technology which fairs well for test equipment vendors. The entrance of AT&T into Mexico will change the competitive landscape in 2015 with increasing quality standards for LTE deployment. Mexico s Federal Institute of Telecommunications is planning to auction 60 MHz of band spectrum between 1.71 GHz and 2.17GHz. The Mexican communications ministry invited operators to test the 700 MHz band spectrum planning deployment by the end of 2014 and planned to select a winner in 2015 to increase the number of service providers operating in areas presently not supported by existing companies. LTE Test Equipment Market: Dashboard, Mexico, 2014 Dashboard Mexico LTE Test Equipment Market Share LTE Test Equipment Revenue 24.7% $10.8 million Note: All figures are rounded. The base year is Source: BN Americas; 4G Americas; Frost & Sullivan. 95

95 Mexico Key Findings (continued) LTE Mobile Services Market: LTE Mobile Services Deployment, Mexico, Operator Frequency (MHz) TDD/FDD/ Band LTE Deployment Date Supplier(s) Notes Telcel 1700/2100 AWS 4 Nov Huawei; Ericsson Coverage: 46 cities in the country; 65% of total population Mexico City, Monterrey, and Nextel 1700/2100 AWS 4 Oct Huawei Guadalajara. expected to reach new 600,000 subscribers in 2015 Movistar Mexico 1700/2100 AWS 4 Oct Huawei Movistar planning to expand LTE coverage to 50 cities in 2015 Lusacell (AT&T) 1900 MHz Lusacell acquired by AT&T in Nov. 2014; LTE coverage in Mexico City and Guadalajara RED Mayorista Publico/Private 700 MHz APT Planned to cover 98% of total population Source: 4G Americas; Frost & Sullivan 96

96 Brazil Key Findings Brazil holds the largest portion of the Latin American LTE mobile subscribers with a total market share of 64% in According to Anatel, Brazil hold 6.7 million LTE mobile subscribers with a growth rate of 416.5% in 2014 compared to 1.3 million subscribers in Brazil is expected to grow to 11 million 4G mobile phones by the end of According to Anatel, Brazil has experienced a huge annual growth in mobile accesses compared to the previous year. 3G (WCDMA) has grown 35.1% in 2014 compared to The Brazilian government is planning to cover 45% of the total population with LTE by the end of December The 700 MHz spectrum will be offered early in main cities and in smaller markets across the country in For LTE test equipment sales in particular, Brazil holds the second position across the region with 18.3% of market share. Brazil is the biggest market for all RF technology in the region. However, for LTE test equipment, most of the decision makers for manufacturing plans are not in the country. Most of the quality requirements are still focused on voice rather than data. LTE Test Equipment Market: Dashboard, Brazil, 2014 Dashboard Brazil LTE Test Equipment Market Share LTE Test Equipment Revenue 18.3% $8.0 million Note: All figures are rounded. The base year is Source: Telecompaper; Anatel; 4G Americas; Frost & Sullivan 97

97 Brazil Key Findings (continued) LTE Mobile Services Market: LTE Mobile Services Deployment, Brazil, Operator Frequency (MHz) Band LTE Deployment Date Supplier(s) Notes Claro Brazil 2600 / 700 MHz APT 7 December 2012 Huawei, Ericsson Coverage: 93 cities; 36.8 % of total population served by 4G; 800,000 LTE subscribers Nextel 1800 MHz 3 June 2014 Huawei On Telecomunicações 2600 TDD 38 March 2013 Huawei Oi 2600 MHz 7 April 2013 Sky Telecom (Broadband) TIM Brasil Ericsson, ALU, NSN 1 municipality; 3.2% of total population served by 4G Coverage: 23 cities in Sao Paulo 45 municipalities; 30.5% of total population served by 4G 2600TDD 38 December 2011 NSN Initial launch in Brazilia 2600 / 700 MHz APT 7 April 2013 Ericsson, Huawei, NSN Coverage: 45 municipalities; 30.2% of total population served by 4G. Source: Telecompaper, 4G Americas; BN Americas; Frost & Sullivan 98

98 Brazil Key Findings (continued) Operator Vivo Algar Telecom (CTBC) Frequency (MHz) Band LTE Deployment Date Supplier(s) Notes 2600 / 700 MHz APT 2600 / 700 MHz APT 7 April Sercomtel 2600 MHZ Huawei, Ericsson Leader in LTE coverage with 140 cities; 40.6% of total population served by 4G; 1.4 million LTE subscribers Planning to invest R$43 M in 2015 for 700MHz Coverage: Londrina area Source: Telecompaper; 4G Americas; BN Americas; Frost & Sullivan 99

99 Colombia Key Findings Colombia is the third most important country in terms of LTE mobile subscriptions with 7% of total Latin America market share and 808,762 mobile subscriptions at the end of Q For LTE test equipment sales, Colombia holds the third position across the region with a number of opportunities for test equipment rental options. Colombia s government announced in October 2014 its objective to assign an extra auction of 20 MHz in 900 spectrum and 5 MHz in 1900 spectrum for new mobile offerings in LTE operators received massive government support to rapidity upgrade their telecommunication services for expanding LTE connection across the country. The Colombian government has now assigned the LTE band spectrum to 7 LTE network operators. Colombia was placed as one of the best countries in the Latin American region in offering frequency spectrum for the deployment of LTE technologies, accomplishing more than 390 MHz auction assignments. LTE Test Equipment Market: Dashboard, Colombia, 2014 Dashboard Colombia LTE Test Equipment Market Share LTE Test Equipment Revenue 17.8% $7.8 million Note: All figures are rounded. The base year is Source: Telecompaper; BN Americas; 4G Americas; Frost & Sullivan 100