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View Newsletter - February 22nd, 2006
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Telecom is Back
Highlights of TIA's, Feb. 15th, Market Review Press Conference
Alan J Weissberger
[email protected]
[Editor's Note: If you are interested in follow-up research
to topics associated with this article, please inform the author of your
interests. The author is also actively seeking research related and technology
assessment work in Broadband Wireless.]
TIA invited selected media members to what turned out
to be a very informative conference call on the status of the telecom
market. The purpose was to promote the release of TIA’s 2006
Telecommunications Market Review and Forecast book. A few
highlights are presented here. A follow on report will depend on readers
communicating their interests to this author.
- TIA states that the US telecom market increased 8.9%
in 2005. Outside the U.S. (ROW) there was 11.4% growth. One of the most
dramatic comebacks has been in the network equipment market. Network
equipment revenue rose 31% over the past two years after falling
71% between 2000 and 2003. TIA continues to see the positive impact
of increased deployment of broadband and IP technologies, thanks at
least in part to FCC decisions and President Bush's call for universal
availability of broadband by 2007.
- While TIA forecasts a compound annual growth rate
of 9.0% for the U.S. telecom market for the period 2006-2009, they imply
that this is predicated on a "clear need" to increase
federal funding levels for telecom research. TIA expects government
agencies such as NIST and NSF to realize huge funding increases as a
result of the President’s proposed budget (which must be passed
by Congress).
- New products and services are emerging as a result
of the ability to connect an ever-increasing array of devices to the
Internet, as well as the ability to access multiple services through
those devices. The result is a voracious demand for bandwidth.
Affordable broadband connectivity along with the service convergence
via IP make this possible. TIA expects to see a fierce battle
between the telcos and the MSOs in their quest to deliver and
sell triple and quadruple play service offerings to residential customers.
MSOs are teaming with wireless providers (e.g. SPRINT-Nextel) to offer
a quadruple play.
- The key to a successful telco triple play
will be the (long promised, but this is the year...) entertainment
video service. The delivery of which is now being offered by
multiple competitors (primary independent telcos) and over various platforms.
The ability of these competitors to enter the marketplace will be further
enabled by video franchise reform (VZ has caused this to happen in Texas).
National legislation may be necessary to address the need for a streamlined,
less burdensome video franchising process through which competition
will flourish.
- Wireless technologies continue to flourish
and drive industry investment. 3G network investments are in full swing
with rollouts emerging. WiMAX is set to become a larger factor as WiMAX
Forum product certifications continue. This June the FCC is scheduled
to auction off 90 megahertz of prime, globally harmonized spectrum
for advanced wireless services. This includes the spectrum converted
from federal use that TIA worked very hard to help secure. They are
very excited about the new network build outs and upgrades that will
result. TIA expects wireless subscriber growth to slow in percentage
terms to 8.5% annually this year. Penetration will increase from 66%
in 2005 to 88% in 2009. Revenue will grow at 11.2% annually fueled by
3G, new applications, and more services. New wireless applications are
driving device spending
- International Wireless Markets: TIA sees wireless
as a catalyst for growth (GDP). They believe there is enormous potential
for expansion, particularly in China and India. Those two countries
alone will add more than 400 million wireless subscribers
during the next four years. Except for Europe, where the subscriber
base is saturated, each region will average double-digit annual growth
- Landline (AKA Wire-line) Market Developments:
- RBOCs are now the major long-distance providers
(no pure long distance plays left)
- Standalone long-distance carriers are leaving
the market (e.g. SPRINT-Nextel)
- Non facility based CLECs are investing in their
own equipment or leaving the market
- Cable operators (MSOs) are major telco competitors
- Broadband is now offered in a bundle with telephone
service
- VoIP is becoming popular, but there are many
unresolved issues+ for residential users
- Television is becoming a necessary component in
a residential service bundle
- Flat rate pricing is replacing per-minute pricing
model for long-distance
- For enterprise customers, IP VPNs are replacing
legacy services, e.g. private line, Frame Relay, and ATM
- E911, battery backup, security, availability,
reliability/ single point of failure, and naked DSL availability
- Key U.S. Regulatory Policy Developments and
Implications
- RBOCs do not have to share high-speed infrastructure
with CLEC competitors and ISPs
- UNE discounts to competitors being phasing out
- Approval of major landline and wireless mergers
have precipitated more aggressive
investments in infrastructure.
- Facilities-based providers are best positioned
to compete - non facilities CLECs are losing
- RBOCs stepping up investment in DSL and fiber
(primarily for video services)
- Rulings on broadband networks set the stage for
RBOC entrance into commercial TV distribution, while legislative
efforts try to speed it up
- Traditional long-distance companies don’t
exist anymore– the standalone long-distance carrier business
model no longer works
- International Internet Access
- Broadband will be the fastest-growing sector,
expanding at a 28.3% annual rate
- Countries view broadband as essential to compete
in the world economy
- Dial-up growth is also expected in Latin America,
Asia/Pacific, and Middle East/Africa, while dial-up in Europe and
Canada is declining
- Key International Market Drivers
- Governments are actively promoting broadband and
encouraging carriers to upgrade
- Wireless broadband is taking off in Europe
- Wireless subscriber ship is growing explosively
in Asia/Pacific
- Privatization and increased investment is boosting
Middle East/Africa
- Rising incomes and a stable economic environment
are benefiting Latin America
- Newly launched VoIP, text messaging interoperability,
and mobile music are happening
- Global Telecom Market Summary
- The telecommunications industry is expanding again
- The U.S.has returned to an upward path and international
markets are growing faster
- Global growth projected at 10 percent compounded
annually through 2009
- Spending will rise from $2.7 trillion in 2005
to $3.9 trillion in 2009
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