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More Capex Medicine

Carrier capital spending is finally recovering in both the U.S. and Europe this year, according to reports from a couple of market research companies.

The U.S. forecast comes from the Telecommunications Industry Association (TIA). It says network equipment spending will increase 2.3 percent in 2004 to $14.4 billion, following a three-year decline (see Network Equipment Capex to Rise 2.3%). It predicts capex will continue growing at a compound annual growth rate of 7 percent, reaching $18.5 billion in 2007.

Much of the growth in the U.S. will come from RBOCs looking to upgrade their networks to offer triple-play services, according to TIA -- assuming the Federal Communications Commission's deregulatory framework for broadband remains intact. Fiber deployment by incumbent carriers is projected to increase 26 percent this year and 41.5 percent in 2005, reaching 4.6 million miles by 2007.

But not everybody agrees. Infonetics Research Inc. paints a gloomier picture; it says total North American capex will fall by 2 percent this year (see Capex Is Back).

Infonetics is more bullish about European carrier capex. It expects this to rise 2 percent this year, from €35.7 billion (US$42.9 billion) in 2003 (see Infonetics Tracks European Capex). That's a marked difference from last year, when it fell a whopping 15 percent.



Competitive carriers cut back the most in 2003, reducing spending by 38 percent to a more sustainable level, according to Infonetics. Only a quarter of capex is now being spent on voice equipment, it says.



— Nicole Willing, Reporter, Light Reading

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