Mobile or Fixed Operating Capex Seems Consistent: 10% Per Year

Some connectivity network capital investment assumptions seem remarkably stable after 50 years.

An example is the adage that a fixed network operator “has to do something” for about 10 percent of the physical plant every year. In other words, each year, existing plant has to be replaced, or new plant added, representing about 10 percent of the installed base.

The best example is replacement of in-service cabling and associated electronics or optics.

That has proven a useful rule of thumb for cable TV and telco access networks, and now also seems to be useful for mobile networks. According to Allot, mobile operators need to add capacity to about 10 percent of cell sites every year.

source: Allot

Essentially, that means every fixed or mobile network is potentially 100-percent renewed every decade, piecemeal.

The big exceptions are the once-a-decade upgrades of mobile networks to the new next-generation platform, such as 4G to 5G; telco upgrades from copper access to fiber-to-the-home; or a cable operator upgrade of DOCSIS or major change in serving area size (accompanied by a shift to deeper fiber deployment).

Where replacement, upgrade or repair of about 10 percent of the existing plant is "operating capex," the once-a-decade architecture upgrades are "strategic capex." The former keeps the existing network operating; the latter upgrades capabilities.