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Preparing for the Pierre

NEW YORK – It’s that time of year. Jimmy Stewart's on TV, crazy Uncle Bob is starting to monkey with the eggnog, and Light Reading is preparing for its annual Telecom Investment confab, to be held here next Wednesday, December 14, at the luxurious Pierre Hotel.

We expect good cheer. After years of cellar-dwelling, the telecom market has been bouncing back. This year, 2005, it will log its second consecutive year of positive capital spending growth, hitting a 10 percent annual growth rate, according to Jefferies & Co. Inc. Guess what: That’s just what we predicted at last year’s conference.

What to expect going forward? Here’s what we see coming: steady growing demand for broadband services and applications; healthy growth and capital spending; and even some modest fireworks in the M&A market, as consolidation continues.

Next week at the Pierre, Heavy Reading chief analyst Scott Clavenna will be examining where the smart money is flowing in a Telecom Hotspots panel. One big area of focus, obviously, will be the fiber build-out. But I think it goes well beyond that. Enormous numbers of new broadband applications and devices are coming online, and the service providers are scrambling to support all of it with an integrated, streamlined, and scaleable architecture.

The fact is, there are seismic shifts going on – and folks need to invest in the change, and quick.

To this end, we'll also hear from keynote speaker Stu Elby, chief architect at (NYSE: VZ), who will give his take on the next-generation telecom network build-out. Elby says the network transformation will take years, not months. “We are trying to move all of our services over time to IP/MPLS,” he points out. He also says that IPTV technology is going to take many years to perfect.

Heavy Reading analyst Rick Thompson will lead a panel on The Broadband Edge, where he’ll take on the nail-biting developments in the B-RAS, IPTV, and edge router markets. Today’s B-RAS, after all, isn’t the one your Aunt Bettie used to know. Thompson will present the findings of his recent research that shows that IP video is having an earthshattering effect on this market… which could provide for some shifts in product leadership.

A number of equipment vendors and service providers will be sharing their takes on the evolution of telecom, including (NYSE: ALA; Paris: CGEP:PA), Atrica Inc., Force10 Networks Inc., MRV Communications Inc. (Nasdaq: MRVC), InfiniRoute Networks Inc., Redback Networks Inc. (Nasdaq: RBAK), and telx Group Inc., among others.

The addition of IP video, in addition to high-speed Internet and VOIP, is one of the primary drivers for this shift that will undoubtedly have a major impact on vendor market share and potentially lead to further consolidation in the vendor community. The battle comes down to the traditional B-RAS/edge-router vendors and newer edge router entrants focused on carrier Ethernet technologies.

Later on in the day, just as your mouth starts watering for that wine tasing that will follow the event, I’ll be moderating a panel on the revolutions within the service provider market, Inside the Carrier Hotel, anchored by a number of service providers who have insights into what the largest carriers are doing inside the guts of their networks.

So, you ask, why even hold a telecom investment conference? Are you tired of hearing those telecom industry jokes at the holiday parties? You know: "You're in telecom? Wow, are you a New York Jets fan, too?”

The reason I'm optimistic is that a new cycle of investment is just getting underway in an industry that makes up nearly 3 percent of global GDP. Telecom technology cycles are naturally long events, filled with massive, revolutionary changes. Miss this turn and you could be missing what’s going to happen for the next ten years.

It's clear that a plethora of new applications and services could cause this market to accelerate. Fueled by competition, service providers of all stripes are about to enter a new phase of battle. Next week, we intend to identify some of the biggest shifts – and opportunities – taking place in the telecom landscape.

We'll cap off the day by naming the winners of our second annual awards program, at the Leading Lights Awards Dinner — R. Scott Raynovich, Editor in Chief, Light Reading

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