Report: Global telecom spending to hit $223.3 billion by 2017

"Customers in every region are pinching pennies and the demand for advanced applications is uncertain," warns Insight Research president Robert Rosenberg.

Global capital expenditure (capex) by telecommunications service providers is expected to increase at a compounded rate of 1.5% over the next five years, from $207 billion in 2012 to $223.3 billion in 2017, says a new market report from Insight Research Corp.

The report, entitled Telecommunications and Capital Investments: Impacts of the Financial Crisis on Worldwide Telecommunications, 2012-2017, provides capital spending forecasts for the U.S., Canada, UK, Germany, France, Japan, China, and India. On a per country basis, capex spending is subdividing according to fixed lines, mobile, and broadband. Forecasts are also provided for capex allocation by equipment, plant, software licenses, and "other."

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The study says that capex in the various global regions will be uneven, with North America, Europe, and the Latin American-Caribbean regions showing little or no growth and only Asia-Pacific and Africa continuing to make investments in telecommunications hardware and software to keep up with burgeoning customer demand for new services.

According to the report, capex among fixed-line operators continues to decline, while capex growth comes mainly from mobile operators in developing countries, who continue increase their capital outlays to meet pent-up demand for service.

While demand for telecommunications services may be income-inelastic and industry revenues may actually grow over the forecast period, services in every global region will nonetheless come under heavy pricing pressure as operators fight over the cost-conscious customers who are quite willing to delay new device purchases, the market research report says.

"Customers in every region are pinching pennies and the demand for advanced applications is uncertain," says Insight Research president Robert Rosenberg. "The confluence of these trends means a further erosion of operator margins, which in turn will affect investments into infrastructures and new technologies since funding is now more difficult to obtain."

The difficulty in finding funding now faced by many operators will certainly slow down, if not derail, the rolling out of investments in next-generation networks, WiMAX, LTE, and converged services, warns Rosenberg.

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