A turnaround is in sight for U.S. telecommunications equipment spending, according to The Telecommunications Industry Association's (TIA) newly issued 2004 Telecommunications Market Review and Forecast. The industry association believes the network equipment market bottomed out in 2003 at $14 billion and is predicting a 2.3% increase to $14.4 billion for 2004. The new spending is attributed to new carrier offerings, such as VoIP, bundled services, data transport and TV -- all of which will require new investment in equipment. Some key findings of the report:
- total spending in the U.S. telecommunications industry rose 4.7% in 2003 to an estimated $720.5 billion
- the U.S. telecommunications industry will grow at a projected 9.2% compound annual rate 2004-2007, reaching $1 trillion.
- the enterprise equipment market expanded 3.9% to $94 billion in 2003. After declining in the previous three years, the PBX market bounced back in 2003 with a 12.0% increase, reaching $4.2 billion on the strength of growing IP-PBX sales. Videoconferencing was the fastest-growing segment, jumping 28.6% and reaching $900 million.
- spending on transport services was essentially flat in 2003 at $285 billion.
- local exchange revenues in 2003 went down 2.9% to $118 billion following a 3.3% decrease in 2002.
- toll-service spending fell 8.2% to $78 billion, its third consecutive decrease as the shift from wireline to wireless in long-distance traffic continued.
- offsetting these declines in 2003 was a 14.3% increase in wireless services to $89 billion, surpassing toll services for the first time. The services market is undergoing a transformation as more consumers are relying exclusively on wireless, VoIP is growing and the distinction between local and long distance is disappearing.
- spending on high-speed Internet access services (including cable modems, DSL, fixed wireless, satellite and FTTH) reached $13 billion in 2003 and TIA expects growth to $25 billion by 2007.
- international telecommunications spending (not including U.S. figures) is predicted to total an estimated $1.5 trillion in 2004, up 10.3% over 2003. TIA expects high-speed Internet access to be the principal driver of equipment spending. International spending on telecommunications equipment is predicted to increase by 5.4% in 2004 to $260.1 billion and then to grow at high single-digit rates through 2007. Overall international telecom spending is expected to reach $2 trillion in 2007, growing at a compound annual rate of 10.5% 2004-2007.
