Telecom spending to reach $99 bln in 2004, $121 bln in 2007

According to the 2004 Telecommunications Market Review and Forecast from the Telecommunications Industry Association (TIA), enterprise telecommunications equipment spending in the US will grow from a current $94 billion to over $99 billion by the end of this year. The TIA expects enterprise telecom equipment spending to grow by a compound annual growth rate (CAGR) of 6.7% between this year and 2007, surpassing $121 billion by the end of 2007.

Cellular infrastructure contracts down, US and China still lead the world

Cellular infrastructure contract awards were down somewhat in 2003 when compared to 2002, and less than a third of the value of the awards recorded in 2001. In 2003, announced infrastructure contract awards totaled the lowest yearly total since 1996.

While contract awards were down in 2003 and 2002, early awards in 2004 look very promising. Much of the shock of the W-CDMA delays has passed, and service providers have started to resume their long-range planning after many delays. While 2004’s results aren’t expected to eclipse the awards of 2001, they should readily beat 2003’s results and maybe 2002’s total as well. The US and China had the largest number and value of contracts awarded anywhere in 2003. Ericsson and Nortel were the big winners of 2003, each getting over 20% of the value of all contracts announced.

Softswitch market grew 42.4% in 2003

With major service providers around the world having already initiated, or announced plans to deliver local and/or long distance voice services, based on softswitch technology, to business and/or residential customers, the total softswitch market in 2003 grew by 42.4%. High-tech market research firm, In-Stat/MDR expects this market to maintain high growth rates over the next several years as major service providers worldwide expand their VoIP networks. As a result, the softswitch market is expected to experience a compound annual growth rate (CAGR) of 64.6%, between 2003 and 2008, resulting in revenues of $2.05 billion.

ATM switch market to decline 3% in 2004

ATM switch market declined more than 6% during 2003 and is forecast to decline an additional 3% during 2004. Despite these challenges, the ATM switch remains an essential component of the ability of NSPs to offer frame relay and ATM services – a $25 billion market and one forecast to grow moderately over the next few years. Expected demand for more than 90 million new DSL subscribers will also help to stimulate sales, as the ATM switch remains a key part of DSL aggregation. Price erosion and technology competition from IP/MPLS routers remain as market inhibitors. The ATM switch will continue as a key part of most large NSP networks, but it is unlikely to be a growth market for network equipment providers.

More Americans cut their landlines

14.4% of US consumers currently use a wireless phone as their primary phone, with the remaining 85.6% still using a landline as their primary phone. However, among those consumers still using a landline as their primary phone, 26.4% would consider replacing it with a wireless phone, demonstrating a significant potential for wireline displacement over the next five years. It is most likely that 29.8% of wireless subscribers will not have a landline by 2008.

Router and swtich revenue up 13%

During Q4 2003, worldwide revenue from routers and switches sold to telephone companies and Internet service providers totaled $1.4 bln, up 13% YTY and up 13% QTQ. For the full year, global revenue for such gear totaled $4.8 bln, a fall of 9% from the previous year, which had itself been marked by weak sales. During 2003, sales of legacy switches continued to slide, giving way to service provider spending on gear built around technologies such as Internet Protocol and multiprotocol label switching. Router revenue edged up 2%, while revenue for multiservice switches fell 23%. The market is expected to grow at a 16% compound annual growth rate through 2007, reaching revenue of $8.6 bln. Market growth year over year is expected to begin again this year.

VoIP market to reach $288 mln in Australia

VoIP will continue to be the sweetspot of next-generation networks. It will double every year over the next four years from $14.3 million in 2003 to $288 million by 2007. The study also shows the government, education and healthcare sectors would see the highest implementation of self-implemented IP telephony, he said. About 13.9% of companies interviewed in this space were currently using the technology. Globally, there are a host of voice-over-broadband (VoBB) technologies including offerings from SIPphone, Vonage, deltathree, Yahoo BB Phone, Skype and DOCSIS 1.1 or 2.0.

Competition in telecom brings lower prices

The General Accounting Office said the new providers are offering competition to existing telephone and cable operators, but few customers get the benefits because they operate only in a few cities. In addition, because of problems raising money and signing up customers, the long-term viability of these providers is not clear. Residents in five municipalities paid at least 15% less for expanded basic cable TV than customers in similar cities without similar competition. Residents in four municipalities paid at least 4% less for telephone service. Residents in three municipalities paid at least 20% less for high-speed Internet service.

Professional VoIP market to top $2.2 bln by 2007

The worldwide market for
Professional Video-over-Internet Protocol (IP) services will top $2.2
Billion (US) during 2007, exhibiting a powerful Compound Annual Growth
Rate of 45.3% between 2003 and 2007, according to In-Stat/MDR. The high-tech market research firm finds that
two key segments will drive strong growth: Live Two-Way Video for
Interactive Communications and Live One-Way Video for Information
Distribution. During 2003, these two “live” categories, combined, only
account for 17.3% of the total market. However, by 2007, they will hold
a 42% share of the worldwide market for all Professional Video-over-IP
network services.

US long distance rates rising

The nation’s largest long-distance carriers have raised their basic rates by an average of more than 55% during the past four years, socking consumers who haven’t signed up for special calling plans, says a report by Consumer Action, a consumer watchdog group. In addition, phone companies have also quietly raised the price of collect and calling cards. MCI has increased the rate for a 10-minute calling card call to $14.25, up 25% in just the past year. And Sprint charges $14.89 for a 10-minute collect call, up 16% from a year ago.

Router market will grow 6% over the next 5 years

The worldwide router market will grow 6% over the next five years, while optical transport and mobility infrastructure won’t see significant growth until 2005, according to Dell’Oro Group. In a set of five-year forecasts, Dell’Oro said the router market will grow from $6.3 billion in 2003 to $8.6 billion in 2008. The second half of 2003 was the “turning point” for the market, which had experienced declining sales for several years, Dell’Oro states.

Israel telecoms to lose money in 2004

The IDC Israel research company predicts that Israeli international telephone operators? revenue will plunge 14.8% in 2004. A study by IDC Israel research director Gideon Lopez indicates that the international carriers had $226.9 million in revenue from calls in 2003, down 4.6% from 2002. Lopez states that the decline this year will be steeper, amounting to a $194 million drop, following the opening of the international calls market to competition.

The study found that overseas call minutes from Israel totaled 1.06 billion in 2003, 8.5% less than in 2002. IDC Israel predicts that the number of overseas calls will rise 1.2% in 2004, despite the expected fall in revenue, indicating that lower prices and the entry of new companies, which will take market shares away from the existing companies, will be the cause of the revenue loss.

Hint to telecoms: build Ethernet, not landlines

Telephone companies could cut their operating costs by 23% a year by using Ethernet services in their metropolitan area networks instead of traditional telecommunications services, according to a new study. The study, scheduled to be released Monday, found that carriers could reduce their operational costs by 18% during the first year of a three-year network implementation. The potential savings rise to 20% in the second year and roughly 24% in the third year, according to the study, which was commissioned by the Metro Ethernet Forum, a marketing group made up of equipment vendors and service providers.

Sales of semiconductors for telecom markets substantially up

A new study from IDC reveals that the semiconductor market for datacom/telecom infrastructure is showing signs of renewed growth. IDC now expects the market to grow 6.2% year-over-year to $3.7 billion in 2004, after a 4.5% year-over-year decline last year. For the 2003-2008 forecast period, IDC predicts the market will experience a 7.3% compound annual growth rate (CAGR), reaching close to $5 billion in 2008.

Landlines still a priority for US telecoms

TNS Telecoms finds that as of Q3 2003, 31% of US consumers? telecommunications budget goes towards land line telephones and 29% is allotted to wireless telephony. TNS bases its findings on a mass review of US households? telecom bills and notes that households pay over $45.00 per month for their land line telephone and their wireless service, respectively. Cable and satellite TV come in a close second, however, costing an average $42.30 per month.