Structured cabling market growth ahead

An overseas study suggests that the U.S. structured cabling market has stabilized and will move slowly into growth.

May 1st, 2002

Compiled by Brian Milligan

An overseas study suggests that the U.S. structured cabling market has stabilized and will move slowly into growth.

"The market will pick up again," says Lone Hansen, team leader for BSRIA Limited's (www.bsria.co.uk) cabling and contracting section. "The year 2000 was an exceptionally good year, and there was the slowdown of 2001. After Sept. 11, it got worse. But the market will slowly recover."

The predictions from U.K.-based BSRIA, in fact, claim that the worst is over for the U.S. structured cabling market. The report predicts growth will occur slowly now after 2001, when sales in the structured cabling market fell by 25%. BSRIA forecasts 2002 sales up by 1% over 2001 and up by 3% over 2001 by 2003. After this, the market is expected to accelerate rapidly-at 8% per annum-returning close to 2000 levels by 2006.

According to the report, the market is expected to increase by an average of 5.2% per year between 2001 and 2005, but will still not reach the 2000 level of $2.1 billion.

The report forecasts that multimode optical fiber to the desk will increase by an average of 14% per annum after last year's fall, but still remains a niche market, accounting for 1% of the total number of drops installed by 2005. The growth here, the report predicts, will be mostly due to purchases from military and government offices, and high-tech companies.

The market for fiber is expected to increase by an average of 5% per year between 2001 and 2005. Fifty-micron fiber is expected to increase significantly, from a 10% market share in 2001 to half the multimode market by 2004/2005.

The forecast was made after BSRIA representatives conducted personal and phone interviews with 27 industry representatives-manufacturers, distributors, and contractors-in the fall and winter of 2001.

Hansen says the predicted growth is now coming at a time when the market is still reeling from the "draconian price cuts" that occurred in 2001. During this time, the prices for some of the structured cabling products were cut by 30%. The report states that pricing competition still remains savage, with Avaya Inc., announcing a 30% price cut on some of its copper cables by the end of October 2001, which was in turn followed by cuts from other suppliers. A further, more modest price cut is expected this year for Category 6 products.

The report also reflects on the uniqueness of the U.S. market, which the BSRIA says is becoming very concentrated-just nine suppliers controlling 70% of the structured cabling market and 12 suppliers accounting for 80% of the market. "We were quite surprised at how concentrated the suppliers were in such a huge market" says Hansen.

Meanwhile, the U.S. installer market remains highly fragmented, with the largest seven companies only controlling around 20% of the market.

Hansen says this shows more of a "highlight" than a concern. She notes that the two biggest distributors in the United States are Graybar and Anixter, and that they dominate the market with CSC and Accu-Tech. Together, the companies control 75% of the market. "The distributors have a lot of power in the States," says Hansen. "Nothing goes directly to the installers."

BSRIA reports that penetration of proposed Category 6 solutions has already reached 34% by value, despite the depressed market and delays of the final standards approval. Category 5, still used for residential and some commercial applications, is expected to disappear by 2003.

Hansen says most companies are not producing Category 5 cable anymore. "The price is the same, so why install Cat 5 when you can get Cat 5e at the same price?" she asks.

The Worst Is Over?

  • The U.S. structured cabling market is expected to increase by an average of 5.2% per year between 2001 and 2005.
  • The market this year is expected to be up by 1% over 2001 and by 3% over 2001 by 2003.
  • After 2003, the market is expected to accelerate rapidly, returning to its 2000 levels by 2006.
  • Multimode optical fiber to the desk will increase at 14% per annum after last year's fall.

Source: BSRIA

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