The U.S. telecommunications market for equipment and services will grow by 7.6% in 2002, generating revenues of $713 billion, with enterprise spending driving market growth.
Telecommunications Industry Association (TIA--www.tiaonline.org) President Matthew Flanigan made this prediction after discussing findings of the 2002 Telecommunications Market Review and Forecast.
"In 2003, we project network infrastructure markets will grow as business and consumer demand for content and collaboration taxes existing network capacity," Flanigan says.
The report says the U.S. telecommunications market for equipment and services grew by 7.2% in 2001, generating revenues of $663 billion. Spending on telecom equipment and software totaled $167 billion in 2001, down 2.8% from 2000.
The report states that spending on transport services rose 6.5% to $303 billion in 2001, led by a 23.2% increase in wireless services. Specialized services, which consist of selected high-speed Internet access options (DSL and cable modems), unified messaging, video and audio conferencing reached an estimated $9.2 billion in 2001, up 51.6% over 2000. Each component of this category recorded double-digit growth in 2001, with high-speed Internet access leading the way with a 78.7% gain.
"Although last year brought challenges to communications companies, the industry fundamentals remain solid," says TIA Vice President Mary Bradshaw, project director for the report. "We project high single-digit growth in the U.S. market overall in 2002, led by strong surges in enterprise spending on applications that make businesses more profitable and productive."
Other major findings of the 2002 report include:
* Spending on network equipment and facilities fell by an estimated 13.8% to $41 billion in 2001. An additional 10.8% drop is expected in 2002, with the market expected to stabilize in 2003. By 2004 and 2005, growth will return to high single-digit and double-digit rates. For the 2001-2005 period, the network equipment and facilities market is projected to expand at a 3% compound annual rate, rising to $46 billion in 2005.
* Capital expenditures by wireless carriers on infrastructure, research and development, and licenses rose by 6.2% to $19.5 billion in 2001. A drop in capital spending is expected in 2002 reflecting the fact that the infrastructure for these new services is established. Beginning in 2003, resurgence in capital spending is anticipated at growth rates in excess of 20% per year as research and implementation of 3G broadband wireless technologies attracts resources.
* Spending by enterprises on voice and data communications equipment totaled an estimated $98 billion in 2001, up 1.2% over 2000. Spending on PBXs, key systems, consumer equipment and voice processing equipment declined, although IP PBXs increased. By 2004 and 2005, the replacement cycle will kick in for voice equipment, and the TIA expects large increases in voice systems in those years, driven by IP system sales.
* Spending on support services grew by an estimated 18.3% to $199 billion in 2001. Services in support of network infrastructure climbed 12.4% to $28 billion; support services for the wireless infrastructure rose by 26.4% to $6 billion; and support services for enterprise voice and data communications equipment grew by 19.1% to $165 billion.
* For the 2001-2005 period, enterprise spending on services in support of voice and data communications equipment will advance at a 15.1% compound annual rate, reaching $289 billion in 2005. By 2005, support services for network infrastructure equipment will total an estimated $43 billion, expanding at an 11.1% compound annual rate from 2001 and support services for wireless infrastructure equipment will total an estimated $12 billion, expanding at a 19% compound annual rate.
* Throughout the 2001-2005 period, spending in the U.S. telecommunications industry will continue to increase at a projected 9.5% compound annual rate, rising to $954 billion. The overall international telecommunications market, including the export of professional services, will expand at an 11.9% annual rate, reaching $1.8 trillion in 2005.
