Telecommunications industry continues to see double-digit growth
--Mark A. DeSorbo
Optical-network-product manufacturer Digital Lightwave Corp. recently reported $8.3 million in sales during the last quarter of 1998, while connectivity manufacturer sbe Inc. achieved $6.5 million in sales for the first fiscal quarter ending Jan. 31.
For Digital Lightwave (Clearwater, FL), the figures represent a 120% increase in sales from fourth-quarter sales of 1997. sbe (San Ramon, CA) earned $2.1 million more in early 1999 than it did in the first quarter of 1998.
Digital Lightwave and sbe are not the only two companies that have something to celebrate. In fact, many telecommunications equipment manufacturers and service providers are feeling this same prosperity. And they will continue to do so, according to the Telecommunications Industry Association (tia--Arlington, VA) and its subsidiary, the MultiMedia Telecommunications Association (mmta-- Arlington).
The tia and mmta report in the jointly published 1999 MultiMedia Telecommunications Market Review and Forecast that the overall U.S. telecommunications market grew by more than 11% in 1998, generating revenues of about $467 billion. Spending on telecommunications equipment continued to grow in the double digits, with an 11.8% increase over 1997 figures, to reach approximately $121 billion. Services, which accounted for about 75% of the 1998 revenue totals, grew 11.3% to more than $352 billion.
tia president Matthew J. Flanigan says the review and forecast indi- cates that U.S. technology continues to drive domestic and foreign markets. "The tia and mmta have worked so hard on this report. This is something the market has always looked forward to," he notes. "I`ve been in the industry for 29 years, and it was always somewhat of a Bible and something the industry has looked forward to."
Among the fastest growing in the equipment categories were computer- telephone integration hardware, up 39%, and groupware, up 29%. Wide area network technologies, such as Asynchronous Transfer Mode, Integrated Services Digital Network, and frame relay, were up 26% while wireless handset markets had 25% more sales than in 1997.
The largest dollar-value equipment category in 1998 was voice- and data-communications enterprise equipment, totaling $65.9 billion, an increase of 12.8% over 1997 figures. The fastest-growing equipment sales categories, according to the report, have been those that provide components primarily used for high-speed data transmission. Servers, Ethernet switches, and network and systems management equipment accounted for more than half the 1998 total.
Flanigan says the demand for fast data rates is what drove these market sectors. "We have been seeing steady double-digit growth," he reports. "The whole thing here is higher-bandwidth services. That`s what people want."
Despite struggling economies in Asia, Flanigan notes that the U.S. telecommunications industry still enjoyed a trade surplus. Moreover, the exportation of telecommunications equipment fell just 1% to $20.7 billion in 1998. "What that points to is the growth and the high priority of a telecommunications infrastructure in those countries," he says.
Flanigan adds that Europe also promises to offer "tremendous opportunities for growth" once it acclimates to a new currency system. The Euro is expected to remove pricing and trade barriers, which will not only help Europe`s overall economy, but will also offer the U.S. telecommunications industry a more efficient and competitive trade arena.
The demand for bandwidth evolved when technology converged and the Internet became a business and consumer tool. "The principal driver is the demand for bandwidth, which comes from the convergence of voice, data, video, and imaging," says mmta president Mary Bradshaw. She adds that the advertising and retail industries` reliance on the Internet as a means of doing business has also contributed to the demand for bandwidth.
Moreover, Bradshaw points out that the mmta is also seeing continued spending growth in a significant yet unassuming market. That segment is professional services in support of network infrastructure equipment and voice- and data-communications equipment, which Bradshaw says totaled more than $117 billion last year. "There is a major shift in how the end-users use backbone networks, and they need that kind of support from professional services that help them with integration and configuration," she explains.
New additions to the tia and mmta`s review and forecast include carrier spending on professional services, more in-depth detail on fiber optics, voice over Internet protocol, and spending by vertical markets.
For more information, or to obtain a copy of 1999 MultiMedia Telecommunications Market Review and Forecast, contact either the tia or mmta at (703) 907-7700.