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The Bright Side of 2003

As the telecom industry enters its third year of a painful decline, the question of "What's next?" is on everyone's mind.

All in all, the vista isn't as bad as it looks. A panel of top-notch experts convened for "2003 Outlook: The Experts Speak," the latest report from the Optical Oracle, Light Reading's paid subscription research service, says progress has been made, despite the collapse of the financial bubble. New technology developments are bound to fire up the next round of telecom innovation, despite what the stock market shows, according to the interviews.

Input from the mavens was gleaned from in-depth interviews, the transcripts of which are published in full in the report. The following experts reported on the state of the industry:



While no one predicts an instant turnaround for the troubled telecom sector, the panelists concurred on some key trends unfolding over the next year:

  • Broadband's Rise: Demand for access to voice, data, and video services among consumers will grow. In the business sector, new private-line services based on IP and MPLS will take root.
  • Wireless LANs: WiFi (IEEE 802.11b) capabilities are the year's "no-brainer," with the technology boosting broadband access to create new data applications for consumers and business users.
  • VOIP: New signaling standards are emerging that will grease the wheels of further voice-over-IP telephony by providing the means to offer voice-with-data services over IP.
  • Optical Integration: A new generation of components manufactured more quickly and more efficiently already presents competition to established optical components players such as JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU). These new components threaten the survival of the optical components status quo.


Most importantly, several experts offered historical reference, describing the current telecom recession as yet another dip in an industry that has been expanding rapidly during the past century.

“The historical pattern of communications spending is that it is growing faster than the economy," points out Odlyzko, who believes the story of the year may well be the coming convergence -- or collision -- among the wireless services providers, wireline service providers, and multiple systems operators (MSOs). But Odlyzko believes the new applications, such as corporate data networking and the exchange of multimedia files formats over telecom networks, will fuel further expansion in the industry.

Hundt, the former FCC boss, believes that politicians will reach consensus over telecom regulation reform, and that the worst of the service provider crisis has already been seen.

What other trends are commonly cited by our experts? Nearly all of them believe the overabundance of cheap bandwidth in the core will be used to create exciting new services such as corporate VPNs, virtual LANs, multimedia services, and grid computing.

Of course, the spread of these applications won't happen overnight. The detailed financial analysis provided in the report shows that carriers are still dealing with declining revenues and recurring charges. Although there are signs of stabilization in capex cuts, carriers are still reducing spending. Meantime, equipment providers are being forced to compete for a shrinking revenue opportunity. This combination of trends heralds further industry consolidation.

— Mary Jander, Senior Editor, Light Reading The current Optical Oracle report -- "2003 Outlook: The Experts Speak" -- is available here. A single-user license to the report is $400. Annual single-user subscriptions to the Optical Oracle, which include access to the entire archives, the current report, and each of the monthly reports issued over the next 12 months, is available for $1,250 per year.

Editor's Note: Light Reading is not affiliated with Oracle Corporation.

photon_mon 12/5/2012 | 12:51:53 AM
re: The Bright Side of 2003 From the article:

Most importantly, several experts offered historical reference, describing the current telecom recession as yet another dip in an industry that has been expanding rapidly during the past century.
________________________________________________

We need to get all of the "dips" out of the industry. In essence, isn't that IT?

Sorry, went through my own personal "moment of zen". Mistakenly thought I should share it. Either that, or go with my Monty Python "Look on the Bright Side of Life" comparison.





whyiswhy 12/5/2012 | 12:51:53 AM
re: The Bright Side of 2003 Scott:

http://www.lightreading.com/bo...

JMHO

-Why
BobbyMax 12/5/2012 | 12:51:44 AM
re: The Bright Side of 2003 There are no indicators to suggest that things for at ;east a decade or longer are going to be any better than they are today. The government hype and the wall street propoganda is simply not enough to sway the international opinion. I hear a famous line these days that the business is cyclical but unfortunately life is not cclical. There used to be propoganda and soundbite from wall street that the stocks are for long haul. But this long haul is not going to come for millions of Americans.

Overe 100 million Americans have lost money in their pension funds. About 90% of their portfolio evaluations have disappeared. Losses are simply too staggering for the economy to recover. The money from the college funds have disappeared. There is almost no oversight moral or otherwise grom the government to make the life of a common person any better. There are about 70 million Americans living a life of misery and poverty. The government has declared itself to be a superpower in spite of these difficulties.

The computer industry lasted about 35 years or so before most asopects of it became commodity product. The optical networking industry did not materialize as there was no need. Billions of dollars were lost by investors while the company management ran away with billions of dollars throgh stock options and other corrupt practices.

I do not see any technology on the horizon that will have any impact on the national economy except for some aspect of wireless ( broadband and mobility services). The traditional carriers are bleeding as there is no room for growth.The semiconductor business is in severe trouble with no where to go.

The area of energy where there needs to be greater investment has been ignored by the Vcs and the government. The government is willing to wage a war for oil and spend billions of dollars on war efforts. This is one area that requires a lot of innovation and eforts.
Soup 12/5/2012 | 12:51:41 AM
re: The Bright Side of 2003 party pooper
grapsfan 12/5/2012 | 12:51:37 AM
re: The Bright Side of 2003 Wow, Bobby, this one makes very little sense even by your standards...let's start from the very beginning, because it's a very good place to start.

> There are no indicators to suggest that things
> for at least a decade or longer are going to be
> any better than they are today.

According to anyone other than you? In our immediate industry, most analysts and estimates by vendors indicate a flat level for the next 4 to 6 quarters, with 3-5% growth in 2004 and continuing beyond that. Some numbers to back me up (which you, of course, never ever have):

- Gartner Group projects 4% T1 private line CAGR, and 15% private line CAGR, between now and 2006.
- RHK echoed similar trends in optical growth in October, with spending moving from $2.8B in 2003 to over $3.4B in 2006, yielding CAGR of 6.3%.
- Aggregation and WDM are both projected to grow approximately 2% per year, with most of that growth focused in the metro space.
- Yankee Group echoed RHK's numbers earlier in 2002, with 2003 estimated core optical spending to be around $2.6B in 2003, growing to $3.4B in 2006.

Now, Bobby, if you were talking about the economy as a whole not growing for another decade...I don't know about that. I'm not an economist, a student of the Federal Reserve, or a policy wonk. Then again, neither are you...just a bitter, upset, "let's complain without offering any solutions," loser.


> The government hype and the wall street
> propoganda is simply not enough to sway the
> international opinion.

Whose opinion, Bobby? The next time I see you quote someone else who shares your insanity will be the first time.


> I hear a famous line these days that the
> business is cyclical but unfortunately life
> is not cclical.

Why not? People have boom times and tough times, just like our economic picture as a whole. The U.S. economy is just a summation of each individual family's financial situation.


> There used to be propoganda and soundbite
> from wall street that the stocks are for
> long haul. But this long haul is not going
> to come for millions of Americans.

It's not propoganda, from what I've seen. People who kept their money in the stock market through the crash in 1987, through the recession and 18% inflation in the 70s, going all the way back to the turn of the century, have a greater ROI than in any other savings plan (bank, bonds, frozen concentrated orange juice futures, etc.).

> Overe 100 million Americans have lost money in
> their pension funds. About 90% of their
> portfolio evaluations have disappeared.

Evaluations that were a lie to begin with. I think you're standing too close to the Kool-Aid bowl...not everyone, not even everyone in telecom, were hasty or naive enough to put all of their retirement funds in dotCom and SCMR stocks. Less than 1% of the population lost 99% of their evaluation, true. But anyone who put all their eggs in one basket weren't smart enough to understand a basic nursery rhyme. Most distributed mutual funds lost some money, but not nearly the sort of catastrophe you talk about (of course, Bobby, everything you do is a way-off generalization, so I'm not sure why I'm even wasting time). Then there's the director at my company who shorted the hell out of every telecom IPO stock and made more money in 2001 & 2002 than any other year of his investing career.


> Losses are simply too staggering for the
> economy to recover. The money from the college
> funds have disappeared.

What we're going through now is not even close to the Great Depression from 1929 to approximately 1938 or so. In that case, the majority of people really did lose everything they saved, and unemployment ranged around 20%. Now, it's around 5-6%. The Great Depression lasted less than a decade before the U.S. returned to financial growth. Oh, yeah, Bobby, it's "too staggering for the economy to recover." I'd think of you as being retarded, except that's an insult to all of those who actually have mental retardation.


> There is almost no oversight moral or otherwise
> grom the government to make the life of a
> common person any better.

OK, one accurate statement. So what? Those involved with the S&L scandals in the 80s were morally bankrupt, and people lost their life savings. And the economy as a whole kept chugging away.


> There are about 70 million Americans living a
> life of misery and poverty.

Geez, Bobby, nice made-up number ya got there. Why not say that 70 billion gazillion Americans are living a life of misery and poverty?


> The government has declared itself to be a
> superpower in spite of these difficulties.

So what, if they're all morally corrupt anyway?


> The computer industry lasted about 35 years or
> so before most asopects of it became commodity
> product. The optical networking industry did
> not materialize as there was no need.

I've absolutely no idea what these two sentences have in common. I'm guessing that you wish to say that it might be another 15 years (fiber systems have been in private network deployment now for about 20 years) before someone can by a fiber application in their home. Fine. Anyone care to take a crack at explaining this to me?


> Billions of dollars were lost by investors
> while the company management ran away with
> billions of dollars throgh stock options and
> other corrupt practices.

True statement #2. But so what? This round of looting is over...the stock prices of companies that can't sustain their valuations are about as low as they can get. There's nothing more for these guys to steal. How does that directly affect 2003, and beyond?


> I do not see any technology on the horizon that
> will have any impact on the national economy
> except for some aspect of wireless ( broadband
> and mobility services).

That's great, because of course, you're plugged in to every sector, every technology, every new development in telecom. I think you need to change your screen name to BobbyMin...nothing "max" about you.


> The traditional carriers are bleeding as
> there is no room for growth.

So where is everyone's projected growth numbers that I stated earlier coming from? Please correct them all for us. I'm dying to know where you're right and the analyst and vendor communities are wrong.


> The semiconductor business is in severe
> trouble with no where to go.

Which, of course, would explain why Intel & AMCC have both declared revenue growth for 4Q02.


> The area of energy where there needs to be
> greater investment has been ignored by the Vcs
> and the government.

Which again, explains why most VCs have an organization that focuses solely on energy, with many having that be their sole function. Try to read ANYTHING before you speak, or go sit at the kiddie table.


> The government is willing to wage a war for oil
> and spend billions of dollars on war efforts.
> This is one area that requires a lot of
> innovation and eforts.

Finally, we get to True Statement #3, which like the other two, has NOTHING to do with the point you're trying to make.

I'm not sure why I spent so much time on this, but I feel better now.
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