Flash: Industry up, down, flat, depending on sector
The ever-present uncertainty is what keeps you in the industry and you know it. According to a rash of recently released studies, parts of the industry are up, down and flat.
• Zero growth in the IP backbone market will prompt backbone providers to focus on key decision criteria used by their ISP customers when choosing backbone vendors, says Watching the Bandwidth Flow — The 2001 ISP Backbone Market, a study from Cahners InStat/MDR. Criteria include price, reliability, company reputation and stability, and service availability.
Other findings show that at the end of 2000, 10 backbone providers generated 92 percent of all wholesale ISP revenue, with WorldCom capturing 44 percent, InStat says.
InStat is a division of Cahners Business Information, which also owns CED magazine and CEDaily Direct.
• By contrast, the worldwide optical switching equipment market will reach $6.45 billion by 2006 from $307 million in 2001, says ARC Group. Moreover, the firm says, after 2006, the technology will dominate the telecom market, mostly in North America, Western European countries and parts of Asia.
According to Optical Metropolitan Networks and Optical Switching Systems, such developing areas as Africa, and those in the Middle East and Latin America will take more time, thanks to slower network evolution.
Findings also show prices will fall as volume manufacturing ramps up, sometime in the second half of 2002.
• More than 40 percent of U.S. companies employing more than 500 people have started moving from Private Branch Exchange systems to IP LAN telephony models, a study from InfoTech says.
IP LAN Telephony: Probing the Shift in Market Demand from InfoTech also notes that demand fell among high-end businesses, but picked up in mid-size companies; demand fell among data network decision makers, but rose among telecom decision makers; demand was up for IP-enabling, existing PBXs, especially in systems of more than 1,000 phones; and demand fell in companies with 40 to 1,000 phones.
• Seventeen service providers spent a total of $64 billion in last year's first three quarters, nearly equaling spending in 2000 and contradicting the notion that spending has dried up, a Yankee Group report says.
Capital Roll Call — 2001 U.S. Carrier Wireline Spending says 2001 saw defunct CLECs and carriers that completed construction, but carriers representing the bulk of wireline spending didn't drastically adjust spending downward. In fact, incumbent local and long-haul carriers — except Qwest Communications International and BellSouth — maintain returns on capital expenses that are equal to or more than 25 percent of revenue.
Spending this year will start out slowly, but will pick up mid-year with large metro requests for proposals and with the enactment of accelerated depreciation legislation, Yankee Group says.