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:
- David Belanger, chief scientist, AT&T Research Labs
- Reed Hundt, senior advisor at McKinsey & Co. and former chairman of the Federal Communications Commission (FCC)
- Andrew Odlyzko, director, Digital Technology Center at the University of Minnesota
- Peter Wagner, partner, Accel Partners
- Scott Clavenna, director of research, Light Reading, and president, PointEast Research LLC
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Most importantly, several experts offered historical reference, describing the current telecom recession as yet another dip in an industry that has been expanding rapidly during the past century.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.