RealTime IT News

TIA Predicts Modest Overall Telecom Growth

The U.S. telecommunications market for equipment and services will grow modestly this year to 7.6 percent as compared to the 2001 growth rate of 7.2 percent according to a forecast by Telecommunications Industry Association's (TIA). The trade association's 2002 Telecommunications Market Review and Forecast predicts total 2002 revenues of $713 billion, up $50 million from last year's $663 billion.

Spending on telecom equipment and software totaled $167 billion in 2001, down 2.8 percent from 2000. Spending on transport services rose 6.5 percent to $303 billion in 2001, led by a 23.2 percent increase in wireless services.

Specialized services, which consist of selected high-speed Internet access options (DSL and cable modems), unified messaging, video and audio conferencing reached an estimated $9.2 billion in 2001, up 51.6 percent over 2000. Each component of this category recorded double-digit growth in 2001, with high-speed Internet access leading the way with a 78.7 percent gain.

"Although last year brought challenges to communications companies, the industry fundamentals remain solid. We project high single-digit growth in the U.S. market overall in 2002, led by strong surges in enterprise spending on applications that make businesses more profitable and productive," stated TIA Vice President Mary Bradshaw, project director for this report.

Other major findings of the 2002 report include:

  • Spending on network equipment and facilities fell by an estimated 13.8 percent to $41 billion in 2001. An additional 10.8 percent drop is expected in 2002, with the market expected to stabilize in 2003. By 2004 and 2005, growth will return to high single-digit and double-digit rates. For the 2001-2005 period, the network equipment and facilities market is projected to expand at a 3 percent compound annual rate, rising to $46 billion in 2005
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  • Capital expenditures by wireless carriers on infrastructure, research and development, and licenses rose by 6.2 percent to $19.5 billion in 2001. A drop in capital spending is expected in 2002 reflecting the fact that the infrastructure for these new services is established. Beginning in 2003, resurgence in capital spending is anticipated at growth rates in excess of 20 percent per year as research and implementation of 3G broadband wireless technologies attracts resources
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  • Spending by enterprises on voice and data communications equipment totaled an estimated $98 billion in 2001, up 1.2 percent over 2000. Spending on PBXs, key systems, consumer equipment and voice processing equipment declined, although IP PBXs increased. By 2004 and 2005, the replacement cycle will kick in for voice equipment, and we expect large increases in voice systems in those years, driven by IP system sales
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  • Spending on support services grew by an estimated 18.3 percent to $199 billion in 2001. Services in support of network infrastructure climbed 12.4 percent to $28 billion; support services for the wireless infrastructure rose by 26.4 percent to $6 billion; and support services for enterprise voice and data communications equipment grew by 19.1 percent to $165 billion
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  • For the 2001-2005 period, enterprise spending on services in support of voice and data communications equipment will advance at a 15.1 percent compound annual rate, reaching $289 billion in 2005. By 2005, support services for network infrastructure equipment will total an estimated $43 billion, expanding at an 11.1 percent compound annual rate from 2001 and support services for wireless infrastructure equipment will total an estimated $12 billion, expanding at a 19 percent compound annual rate; and
  • Over the 2001-2005 period, spending in the U.S. telecommunications industry will continue to increase at a projected 9.5 percent compound annual rate, rising to $954 billion. The overall international telecommunications market, including the export of professional services, will expand at an 11.9 percent annual rate, reaching $1.8 trillion in 2005
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