State of the (Comm)Union

The bad days seem to be over for U.S. telecom companies, although the boom
times are gone, never to return. Research and Markets, a Dublin, Ireland-based research firm, reported
that most operators have gotten down to business, focusing on increasing
their customer bases while becoming profitable.

“It is believed it will not be
until 2005/6 before the market returns to usual levels,” the report
said. “And when it does, it will be valued in a similar
manner to any other mature national market — not at the ridiculous levels
witnessed in the telecommunications and dot.com boom.”

The firm said that consolidation in the wireless market, following the
acquisition of AT&T Wireless by Cingular after a brief bidding war with
Europe’s Vodafone, will continue as long as a number of strong operators
remain. In the meantime, congested networks and spectrum in urban areas will
provide enough customers for the current number of wireless services.

While wireless carriers have for the most part upgraded their networks to
General Packet Radio Service or CDMA2000 1xRTT — and are now rolling
out EV-DO and EDGE or WCDMA services across the country — they don’t face the
same government mandates to build third-generation networks that European
operators must deal with. This has allowed them to spend their bucks on
customer acquisition and increasing average revenue per user.

SMS and other mobile messaging services began to make an impact on mobile operators’
bottom lines, with usage of these services amongst the youth segment
beginning to mirror usage levels seen in Europe.

Research and Markets said businesses are accepting voice over IP ,
thanks in part to support by mainstream U.S. operators like
AT&T. By 2006, the report said, IP telephony will be one of the major
factors driving the growth in broadband services.

Demand for Internet access and data services continues to be strong.
Research and markets said the total population of Internet users passed 207
million and now mirrors the general population in terms of demographics.
However, the promised fast and furious growth or broadband services never
materialized.

“What is being witnessed instead is the organic growth of a market — but
it is now beginning to reach the penetration rates that were initially
forecast,” the report said.

DSL and cable modem Internet services
continue to dominate the broadband access market, with fixed wireless and
satellite services relegated to niche markets where fixed-line solutions are
not available. Competition continues to drive down prices, although more
slowly than in previous years.

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