Report: Telecom industry surging with broadband demand

January 30, 2007 -- The TIA's 2007 Market Review and Forecast report shows that U.S. revenues have grown 9.3% since 2000, with worldwide revenues up 11.2%.

Jan 30th, 2007

January 30, 2007 -- According to the TIA's (www.tiaonline.org) 2007 Telecommunications Market Review and Forecast report, in 2006, the U.S. telecom industry grew at its fastest rate since 2000 -- showing that the drive towards convergence continues to stimulate the industry, contends the association.

The annual report analyzes the trends affecting the information and communications technology industry. The report includes an overview of the entire industry, as well as detailed sections on the landline, wireless, equipment and international markets.

TIA's annual review of the health of the telecom industry shows that the U.S. market grew 9.3 percent in 2006 to total $923 billion in revenue, and the worldwide telecommunications market grew 11.2 percent to total $3 trillion. Demand for broadband and high-speed services is seen fueling this growth, as carriers invest in new fiber, IP technology and wireless infrastructure to provide voice, video and data services.

"Consumers are thirsty for broadband, and this report shows carriers are rushing to meet the demand," says Grant Seiffert, TIA president. "Technologies like voice over Internet protocol (VoIP) and broadband video, as well as new mobile data services, are sparking new growth in the telecommunications industry. As a result, carriers are offering more competitive all-in-one bundled packages, and consumers are seeing lower prices and more services."

The report finds that the U.S. market continues in transition, as both landline and wireless providers upgrade their networks to offer bundled and high-speed services to consumers. As a result, the U.S. network and enterprise equipment markets experienced a double-digit increase in revenue for the third straight year in 2006. Accelerated fiber deployment is seen as a principal catalyst for the market expansion.

The report forecasts growth for competing new broadband technologies such as fiber, satellite, wireless and broadband over powerline, which combined are to account for more than 11 percent of broadband subscribers in 2010. However, in 2006, cable modems and digital subscriber line (DSL) technology continued to dominate the U.S. market, capturing 96 percent of the broadband market, which in 2005 overtook dial-up access service. By 2010, 87 percent of Internet connections will be over broadband technology.

The TIA notes that broadband video is one driving force behind deployment of the fiber needed to carry the high-capacity signal for this new technology, which allows telephone carriers to provide a TV service comparable to cable TV. According to the report, more than 12 million miles of fiber were deployed in 2006 -- up 9.1 percent from 2005, with nearly 10 million miles being deployed by the telephone companies.

While growth in voice traffic continues to stimulate the wireless market, data and multimedia applications are seen driving wireless revenues in the future. Though accounting for just 10 percent of U.S. wireless revenue in 2006, wireless data and multimedia services are forecast to make up 24 percent of all wireless revenue by 2010. Accordingly, the report says that wireless carriers are investing in network upgrades to boost speed and availability.

Growth is expected in VoIP, as the broadband-based phone technology is forecast to make up 34 percent of all U.S. residential landlines by 2010, or 25.5 million subscribers, up from just 10 percent and 9.5 million subscribers in 2006. A majority of cable telephone subscriptions use VoIP, notes the report.

Further, the report finds that more U.S. businesses are using communication systems based on Internet protocol technology. The adoption of IP-based "converged" enterprise network equipment has surged during the past two years as leases of legacy equipment have expired, the report says. IP/converged systems are expected to overtake traditional enterprise systems by 2009.

Globally, the report finds that Europe has the largest telecommunications market, measuring at $1 trillion, with the U.S. second at $923 billion and Asia/Pacific third at $715 billion. Overall, the international market grew 12.1 percent in 2006. Middle East/Africa was the fastest- growing region, expanding at 21.6 percent. By 2010, the global market is expected to reach $4.3 trillion in revenue.


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