This year’s wired communication infrastructure equipment sales are expected to reach $41 billion, the highest annual level since 2002, according to iSuppli .
The downside is that revenue growth will be lackluster, with only a 1.6 percent increase. Telco equipment spending rose 10.7 percent last year, and 8.3 percent in 2005.
“The major reason for the slowdown is focused spending and a “pay-as-you-grow” strategy among telcos,” said Steve Rago, principal analyst for IPTV, broadband and digital home research at iSuppli, in a statement. “The marginal increase in 2007 spending is being driven largely by telcos’ purchases of equipment to deploy Internet Protocol Television (IPTV) services. iSuppli estimates $9 billion will be spent on IPTV-related communications equipment in 2007.”
Last year, telcos spent the most funds on access equipment. This year, iSuppli said it expects carriers to continue access-equipment spending at 2006 levels while significantly increasing investments in their core networks to provide the bandwidth and QoS necessary to support IPTV growth.
Global IPTV subscribers will soar to 105.8 million in 2011, from 3.4 million in 2006, iSuppli predicts. To serve this huge base, iSuppli said the telcos’ IPTV budgets will have to account for 20 percent of their total capital spending by 2011, including networking equipment, software and customer premises equipment.