Subject: [NEXTEL-1] TIA's Market Review and Forecast Predicts Turnaround In Sight for U.S. Telecom Industry

From: [email-masked]
Date: Tue, 10 Feb 2004 17:46:06 -0500

TIA's Market Review and Forecast Predicts Turnaround In Sight for U.S. Telecom
Industry

We recently released TIA's 2004 Telecommunications
Market Review and Forecast, an annual study which
provides an overview of telecom's interrelated segments.

The report projects that a turnaround is in sight for U.S.
telecom industry. We predict the market will grow at a
nearly 9.2 percent compound annual growth rate (CAGR)
from 2004-2007 to reach almost $1 trillion. When combined
with the nearly $2 trillion that will be spent by other regions
of the world by 2007, we are confident about where the
industry is headed. These stats are welcome news for TIA, because they
indicate that our members' customers should be spending money again.

We believe that one of the factors that will continue to drive higher spending
levels in the near future is broadband. Spending on broadband equipment and
services has been relatively strong in the last year, reaching almost $13
billion in 2003, up 41 percent over 2002. This figure is expected to nearly
double by 2007. Improvements in the overall U.S. economy, combined with recent
regulatory and policy changes, are driving this growth. Most notably, the FCC's
Triennial Review Report and Order released last August was a big victory for TIA
and its members. We believe that the beneficiaries of this decision, such as
incumbent local exchange carriers, will fulfill their promise to build more
broadband networks.

New "triple play" networks are necessary as service providers are looking to
voice over Internet protocol (VoIP), bundled services, data transport and TV to
generate additional revenue, which will require new investment in equipment.  By
2007, network equipment spending will total $18.5 billion, climbing at a 7.0
percent compound annual rate from 2003. We believe the network equipment market
bottomed out in 2003 at $14.1 billion.

Unlike the network side, the enterprise equipment market has grown over the past
few years. The enterprise equipment market expanded 3.9 percent to $94 billion
in 2003. In the enterprise, the shift to IP is boosting most segments of
equipment spending. For instance, after declining in the previous three years,
the PBX market bounced back in 2003 with a 12.0 percent increase, reaching $4.2
billion on the strength of growing IP-PBX sales. Videoconferencing was the
fastest-growing segment, jumping 28.6 percent and reaching $900 million.

TIA's Market Review and Forecast also highlights the transformation taking place
on the services side of the market. Spending on transport services was
essentially flat in 2003 at $285 billion. Local exchange revenues went down 2.9
percent to $118 billion following a 3.3 percent decrease in 2002. Toll-service
spending fell 8.2 percent to $78 billion, its third consecutive decrease as the
shift from wireline to wireless in long-distance traffic continued. Offsetting
these declines in 2003 was a 14.3 percent increase in wireless services to $89
billion, surpassing toll services for the first time. The services market is
undergoing a transformation as more consumers are relying exclusively on
wireless, VoIP is growing and the distinction between local and long-distance is
disappearing for both wireless and wireline.

Wireless trends are detailed in TIA’s Market Review and Forecast, and our
article in this issue provides wireless highlights. The international market,
predicted to total an estimated $1.5 trillion in 2004, is also featured in the
report. The international market will grow faster than the U.S. market, reaching
$2 trillion in 2007.

http://pulse.tiaonline.org/article.cfm?id=1935
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