Business gateways to generate $1.2 bln in 2004

Over the next 12-24 months, In-Stat/MDR anticipates that a new breed of small business and branch office multi-service devices will emerge. Designed to support multi-services from the ground up, these devices will form a new product segment defined by In-Stat/MDR as the Business Gateway that could be responsible for turning the networking equipment industry upside down. The high-tech market research firm forecasts that the Business Gateway market will grow from $1.2 bln in 2004 to $16.6 bln in 2008.

Western European telecom market to grow 3.7% in 2004, 3.8% in 2005

For the telecommunications industry in Western Europe, EITO analysts expect the rates of growth for 2004 and 2005, of 3.7% and 3.8% respectively. The market will reach a volume of EUR 318 bln in 2004 and increase in 2005 to EUR 330 bln. While Scandinavia is among the market leaders this year as well as next year (with growth of 4.0 and 4.3% respectively), France, with 3.5% growth in 2005, will fall behind the Benelux countries (4.3%).

Large enterprises will spend $38 bln on wireline telecom in 2004

Data connectivity, particularly on the fixed-line, is the largest part of enterprise telecom expenditures. In-Stat/MDR estimates that these firms (with 1,000 or more employees) will spend $38 billion on wireline data services in 2004, roughly a 15% increase from 2003 estimates. The powerful growth of this category of expenditures is expected to be driven by strong adoption of new classes of data access, such as broadband (for at-home workers and remote sites), IP-based services, including voice, and a variety of managed network-based services, such as VPNs and managed network security services (from a telecom provider, e.g. AT&T’s Internet Protect services). While these new classes of services are expected to grow quickly, core wireline data services, like private line, shared Internet access and frame relay are expected to stagnate, as opposed to dropping dramatically.

As a result, spending in this category will grow quickly, with enterprise firms expected to spend $55.9 billion on wireline data services, a 10% average year-to-year increase. As usual, the largest percentage, 61% of the total or $23 billion, of enterprise wireline data services spending comes from the largest firms (10,000 or more employees) in this market. However, very similar to overall telecom spending trends in this market, growth in this sub-segment’s wireline data expenditures is expected to dip downward dramatically in 2006 and slowly increase thereafter. Consolidation will be the primary factor to this decline in spending growth.

Wireline telecom revenue to decline 1.6% a year

The $221 billion US wireline telecommunications industry is mired in a digital revolution. During this period of transition, wireline telecom revenue will decline at a compound annual growth rate of 1.6% from 2003 to 2008. Top-line revenue decline will be tempered by growth in data revenue; however, the promised surge in data revenue has proved elusive so far. IDC believes future revenue growth will be driven by demand for more innovative data applications and greater integration of wireline with wireless services.

Telecom service prices fall down 10% every year

The prices of most telecom services have fallen by 10% every year even while their adoption increased by around 15%. This makes it difficult to create a defendable and profitable niche within the market because dozens of competitors can deliver the same service. Telecom carriers see a way out of the situation with service bundling. Apart from reducing customer churn, it enables carriers to provide commoditized services at prices higher than the market value. Bundling can also help save costs in areas of bill statement creation, paper, printing, and postage.

15% of Americans to cut the telephone cord by 2009

Merely 3% of Americans use a cell phone as their only phone today. But Yankee Group predicts that by 2009 as many as 15% of American adults will have cut the cord. If that happens, pollsters would face the frightening proposition that more than one in seven adults would have zero probability of being included in a sample. If that scenario plays out, it could put a serious dent in the fundamental statistical basis of national polls.

20.8 mln DLC ports shipped in 2003

Digital Loop Carriers (DLCs) are evolving to support new services in the access network and provide new functionalities for improved cost efficiencies for service providers, according to In-Stat/MDR. As more service providers are planning to offer triple-play services of voice, data, and video, DLC vendors are offering products that will enable them to do this. The biggest immediate driver for DLC market growth is support of DSL services. DSL subscriber growth has been strong worldwide, and new forms of DSL (e.g. ADSL2+ and VDSL) require new line cards to be deployed to replace older versions. DSL/POTS combo cards are also replacing POTS-only cards. Growth in triple-play services will drive demand for DLCs that provide enough bandwidth to support video, as well as efficient support for IP multicasting and QoS. Fiber-based services are still small now, but expansion of these services will occur over time, and open up an important new market opportunity for DLCs, as is already happening for some vendors.

Worldwide DLC total POTS + DSL port shipments in 2003 were about 20.8 million. About 80% of these were POTS ports and 20% were DSL ports. Huawei became the worldwide leader in overall DLC port shipments in 2003. About 90% of Huawei’s port shipments in 2003 were in Asia. Worldwide POTS port shipments will grow at a CAGR of about 6% from 2003 – 2008, and DSL port shipments will grow at a slightly greater CAGR of about 8% over this period.

India to become third largest telecom market in 2010

India is on its way to being the third-largest telecom and ICT market by 2010 Cellular Operators Association of India (COAI). Mobile phone subscriptions have reached 41 mln in over 2,000 cities, with GSM and CDMA segments topping 32 mln and nine mln subscriptions respectively, Modi stated. The figure amounts to around two mln new mobile-phone subscriptions every month, compared to 300,000 a month in 2002, Modi stated. By 2007, subscriptions are expected to climb to 100 mln. India currently has 45 mln fixed-line telephone subscriptions, accounting for about 4.5% of the population.

Fiber to the premises to grow 54% a year till 2009

KMI Research predicts Fiber to the Premises (FTTP) is poised for a 54% CAGR through 2009. The analysts say that Verizon’s announcement and commitment to pass one mln homes in 2004 has made FTTP the fiberoptics industry’s most exciting development since the late 1990s. KMI Research forecasts that the total FTTP market for equipment, cable, and apparatus will reach $3.2 billion in 2009.

LAN switch market down 2%

The market for local area network switches dipped 2% in Q2 from Q1 2004, when 13% growth had been reported, according to IDC. But the LAN switch market is up 23% from Q2 2003. Port shipments fell 1% sequentially but were up 34% YTY.

Asian Fibre Channel market grew 43.3% in 2003

In 2003, the Fibre Channel switch market in Asia/Pacific excluding Japan registered healthy growth in terms of total revenue and port shipments, fueled by recoveries in shipments of servers and storage devices that connect to Fibre Channel SANs. Overall port shipments grew 91.1% in 2003, reaching 147,300 ports which raised Fibre Channel market revenue by 43.3% from $88.4 million in 2002 to $126.7 million in 2003. The three largest markets for FC switches in 2003 were PRC at $35.2 million, Australia at $25.9 million, and Korea at $22.4 million, although the smaller country markets in the region also registered significant sales.

30% of US and UK population to use VOIP by 2008

Mercer Management Group survey says more than 30% of US and UK population will subscribe to VOIP service in the next 3 years. IDC says by the end of 2004 600K Americans will enjoy home VOIP. However, in the battle for preferred provider the phone giants are bound to dominate.

Corporate IP telephony market to generate $5.5 bln in 2008

The Radicati Group projects that worldwide revenue from the corporate Internet protocol (IP) telephony business will grow from $1 billion by the end of this year to $5.5 billion in 2008. 44% of corporate telephone lines will be IP-based by 2008, having risen by over 14 times the current installed base. Meanwhile In-Stat/MDR reported in April 2003 that 50% of all enterprise telephone stations sold in the US were IP-based.