TIA Forecasts US Growth

TIA's 2003 Market Review and Forecast says spending in the US telecom industry will rise 8% to $736B, led by specialized services spending

February 26, 2003

3 Min Read

ARLINGTON, Va. -- Total spending in the U.S. telecommunications industry from 2003 to 2006 will increase at a projected 9 percent compound annual rate, rising to $963 billion, according to the 2003 Telecommunications Market Review and Forecast, an annual study published by the Telecommunications Industry Association (TIA). Spending in the U.S. telecommunications industry as a whole totaled an estimated $681 billion in 2002, up 3.5 percent over 2001. Double-digit increases in wireless services, services in support of equipment, and high-speed Internet access offset the 15.4 percent drop in equipment spending. The defining trend in U.S. telecommunications in 2001 and 2002 was the sharp drop in equipment spending. Spending on all telecommunications equipment has fallen by a combined 24 percent over the past two years. Enterprise equipment, the largest sector of the market, was able to post a modest increase, but that gain was more than offset by decreases in network equipment, consumer telecommunications equipment, wireless capital expenditures and wireless handsets. Spending on enterprise voice/data equipment is expected to increase by 6.1 percent from $86.4 billion in 2002 to $91.7 billion in 2003. Enterprise equipment spending will be stimulated by migration to next-generation technologies. For example, the PBX systems market is undergoing a major evolutionary technology migration from a circuit-switching to an Ethernet-based packet-switching design platform using Internet protocol (IP) encoding techniques. This migration to IP will result in a demand for IP technologies. IP PBX line shipments will rise from 1 million in 2002 to 4 million in 2006, surpassing traditional shipments in 2006. Their combined total will be 7.8 million in 2006, up from 6.2 million in 2002. The total U.S. telecom market will begin to rebound in 2003, growing 8 percent to $736 billion. The specialized services category -- consisting of high-speed Internet access, applications such as unified messaging, and videoconferencing and audioconferencing services -- is a small but rapidly growing segment of the industry. Spending on specialized services is estimated to increase 37 percent to $21.3 billion in 2003, up from $15.6 billion in 2002. It will reach an estimated $39 billion in 2006, growing at a 26 percent compound annual rate. As carrier revenues are increased by these specialized services, carrier demand for gear will rise. By 2006, equipment spending in the United States will total an estimated $174 billion, climbing at a 7.1 percent compound annual rate from 2003. Carrier spending on equipment is expected to increase by 5.8 percent in 2003, reaching $23.2 billion up from $22 billion in 2002. Total wireless communications spending is expected to increase from $123.4 billion to $164.5 billion during 2003-2006, at a 9.6 percent compound annual rate. In the wireless segment, Internet access and text messaging will be sources of growth. Wireless local area networks (WLANs), including Wi-Fi, have become a source of robust growth in the wireless market as the number of "hot spots" rises rapidly as access points appear in coffee shops, airports, hotels and other areas with high concentrations of users. As with specialized services, carrier spending on the equipment related to the creation of these networks will lead to an increase in wireless Internet traffic, which will boost overall network traffic and ultimately stimulate spending on network equipment for licensed and unlicensed, as well as land line carriers. The number of high-speed subscribers -- including DSL, cable, fixed wireless, fiber-to-the-home, satellite and mobile wireless (3G) -- is expected to rise from 15 million in 2002 to 40 million in 2006, generating substantial growth in network traffic. International telecommunications spending growth rates (not including U.S. figures) are predicted to total an estimated $1.4 trillion in 2003, up 10.1 percent over 2002. TIA expects international telecommunications markets to grow faster than the U.S. market, boosted by explosive growth in wireless services. International telecom spending is predicted to reach $1.5 trillion in 2004 and to grow at better than 10 percent annually through 2006, reaching $1.9 trillion in 2006. Telecommunications Industry Association (TIA)

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