Mobile network optimization is big money. So much so that a new study by ABI Research found that in just five years’ time, mobile network operators will spend more than $1.8 billion on web/video optimization.

Additionally, the report found that network operators will spend more than $1.2 billion on policy management, more than $1.5 billion on deep packet inspection (DPI), and billions more on other test equipment, network probes and other optimization solutions. 

“We’re talking big money here,” said Jim Eller, principal analyst, wireless infrastructure, adding that “ten years ago, most of these products did not exist, so the market growth looks like the proverbial hockey stick.

ABI Research’s new study, “Mobile Network Optimization,” examines the tools and technologies used for mobile network optimization, including current and future trends.

The iPhone quickly changed the mobile data process, with users downloading large volumes of data over their phones, causing mobile operators to search for new solutions to help their networks handle the increased data traffic, according to ABI researchers.

As such, new markets have quickly appeared for products that didn’t exist a few years earlier and small companies are hustling to roll out new technologies to exploit these opportunities, Eller pointed out.

Although some of the mobile network optimization revenue will go to the big network equipment players including Alcatel-Lucent, Ericsson, Huawei, Nokia Siemens Networks, and ZTE, ABI researchers said that most of the money will go to smaller companies specializing in technologies like DPI and video streaming. 

“With so much money on the table, some of these smaller companies will be attractive targets for M&A activity,” said Aditya Kaul, practice director, mobile networks.

The study found that while most small start-ups are funded by venture capital, some of the newer firms have yet to show a profit. However, ABI sees huge growth potential for the small vendors.

In related news, during a recent video interview with TMC CEO Rich Tehrani, Indranil Chatterjee, vice president of Product Management at Openwave, said about 75 percent of mobile traffic growth can be attributed to video – an area where Openwave is putting a lot of its efforts, TechZone360 reported

“Because of traffic growth, there is a lot of CAPEX investment operators have to do, either in terms of backhaul or new cells,” Chatterjee said during the interview. “We help by reducing the number of bytes flowing over the network. We provide optimization of video traffic in terms of congestion, content and context based on subscriber and device.”

ABI said the growth potential for smaller companies is positive and the valuation of these companies is still relatively cheap.

“As a result, acquisitions in this space are already occurring,” according to a statement issued by ABI.