1. TIA’s 2006 Telecommunications Market Review and Forecast
SOURCE:
TIA
TITLE:
Summary of TIA’s 2006 Telecommunications Market Review and Forecast
AGENDA ITEM:
Opening 4.8 Joint
CONTACT:
Dan Bart, TIA
gsc11_open_13a4r1
TIA’s 2006 Telecommunications Market Review and Forecast
Briefing
URL for more information:

2. GSC: Standardization Advancing Global Communications
Outlook
Rebound in 2004 sustained in 2005 – U.S. up 8.9%, international rose 11.4% and global grew 10.6%
U.S. growth projected at 9.0% compounded annually, international at 10.4% and global at 10.0%
Global market will reach $3.9 trillion in $1.2 trillion in the U.S. and $2.7 trillion internationally
GSC: Standardization Advancing Global Communications

3. GSC: Standardization Advancing Global Communications
Growth Drivers in 2005
Broadband
Wireless
IP technology
Public network equipment
Professional services
Latin America, Asia/Pacific, and Middle East/Africa led international growth
GSC: Standardization Advancing Global Communications

4. U.S. Market in Transition
Telephone becoming a component of a bundled service of local/long distance, broadband and TV
Internet becoming a platform for voice -- VoIP
Wireless carriers focused on boosting ARPU – promoting new applications and new devices
Convergence taking off at the enterprise – IP equipment replacing legacy technologies
For enterprise data transport, IP VPNs surging and legacy technologies fading
Rebound in fiber deployment
Landline declining
GSC: Standardization Advancing Global Communications

5. The Competitive Landscape
RBOCs and MSOs are principal competitors for landline subscribers
Competition driving down broadband prices, spurring RBOC entrance into TV market and MSOs to wireless alliances
Demand for IP systems to improve productivity and for CTI and other applications to enhance customer relations
GSC: Standardization Advancing Global Communications

6. GSC: Standardization Advancing Global Communications
Impact of Competition
RBOCs and municipalities investing in fiber
Enterprises buying IP equipment
Variety of competing broadband platforms – BPL, WiMAX, 3G, Wi-Fi, others
New wireless applications driving device spending
GSC: Standardization Advancing Global Communications

7. Key Policy Developments
RBOCs do not have to share high-speed infrastructure with CLEC competitors and ISPs
UNE discounts phasing out
Approval of major landline and wireless mergers
GSC: Standardization Advancing Global Communications

8. GSC: Standardization Advancing Global Communications
Policy Implications
Facilities-based providers best positioned to compete
RBOCs stepping up investment in DSL and fiber
Rulings on broadband networks set the stage for RBOC entrance into TV distribution, while legislative efforts try to speed it up
Traditional long-distance companies out of the market – the standalone long-distance business model no longer works
GSC: Standardization Advancing Global Communications

9. GSC: Standardization Advancing Global Communications
Network Equipment
After falling by 71% between 2000 and 2003, spending rose by 31% during past two years
Rebound in fiber spurred by RBOC entrance into TV
Increased traffic will stimulate further investment
Growth will average 5.2% to $24 billion in 2009, still less than half the total in 2000 but 61% higher than in 2003
GSC: Standardization Advancing Global Communications

10. GSC: Standardization Advancing Global Communications
Broadband
Broadband passed dial-up in 2005
RBOC-MSO competition driving down broadband prices
Demand for high-volume applications – music, video games, movies – fueling growth
GSC: Standardization Advancing Global Communications

11. GSC: Standardization Advancing Global Communications
Voice over IP
Market driven by expanding broadband universe, low prices, and range of features
E911 issue
VoIP will help stem landline erosion
GSC: Standardization Advancing Global Communications

12. GSC: Standardization Advancing Global Communications
IP Equipment
IP-PBXs replacing traditional PBXs
KTS owners trading up to IP-PBXs
Centrex users shifting to IP-PBXs
Need to replace aging equipment is spurring migration to IP-PBX
GSC: Standardization Advancing Global Communications

13. GSC: Standardization Advancing Global Communications
PBX Installed Base
IP seen as a way to improve efficiency
Standards-based architecture promotes competition
Easy to install, easy to move
Unified messaging
IP installed base to pass traditional in 2008
GSC: Standardization Advancing Global Communications

14. GSC: Standardization Advancing Global Communications
Data Transport
VPNs beginning to cut into leased line, frame relay, and ATM market
Cost savings
Scalability
Accessibility
GSC: Standardization Advancing Global Communications

15. GSC: Standardization Advancing Global Communications
Wireless
Still room for expansion but subscriber growth will slow in percentage terms to 8.5% annually
Penetration will increase from 66% in 2005 to 88% in 2009
Revenue will grow at 11.2% annually fueled by 3G, new applications, bigger plans
GSC: Standardization Advancing Global Communications

16. Landline Developments
RBOCs are now the major long-distance providers
Standalone long-distance carriers are leaving the market
CLECs without their own facilities are investing in their own equipment or leaving the market
Cable operators are major competitors
Broadband is now offered in a bundle with telephone service
VoIP is becoming popular
Television is becoming a necessary component in a service bundle
Flat-rate pricing is replacing per-minute pricing model for long-distance
GSC: Standardization Advancing Global Communications

17. GSC: Standardization Advancing Global Communications
Landline Market
Landline subscribership is falling
Subscribers dropping second lines in favor of wireless
Broadband cutting into demand for second lines for dial-up Internet access
Some people now rely exclusively on wireless
Flat rate pricing will help landline neutralize wireless advantage
VoIP will attract subscribers to landline
Landline erosion will moderate and landline revenue will stabilize
GSC: Standardization Advancing Global Communications

18. International Markets
Europe has the world’s largest market at $931 billion in 2005
Asia/Pacific in third (behind the U.S.) at $630 billion
Asia/Pacific, Latin America, and Middle East/Africa will be the fastest growing
Asia/Pacific will pass the $1 trillion level in 2009 and Europe will exceed $1.2 trillion
GSC: Standardization Advancing Global Communications

19. Key International Drivers
Governments are actively promoting broadband and encouraging carriers to upgrade
Wireless broadband is taking off in Europe
Wireless subscribership is growing explosively in Asia/Pacific
Privatization and increased investment is boosting Middle East/Africa
Rising incomes and a stable economic environment are benefiting Latin America
Newly launched VoIP, text messaging interoperability, and mobile music are enhancing Canada
GSC: Standardization Advancing Global Communications

20. International Internet Access
Broadband will be the fastest-growing sector, expanding at a 28.3% annual rate
Countries view broadband as essential to compete in the world economy
Dial-up growth is also expected in Latin America, Asia/Pacific, and Middle East/Africa, while dial-up in Europe and Canada is declining
GSC: Standardization Advancing Global Communications

21. International Wireless Markets
Wireless is also a major catalyst for growth
There is enormous potential for expansion, particularly in China and India
Those two countries alone will add more than 400 million wireless subscribers during the next four years
Except for Europe, which is saturated, each region will average double-digit annual growth
GSC: Standardization Advancing Global Communications

22. GSC: Standardization Advancing Global Communications
Global Market
The telecommunications industry is expanding again
The U.S.has returned to an upward path and international markets are growing faster
Global growth projected at 10 percent compounded annually through 2009
Spending will rise from $2.7 trillion in 2005 to $3.9 trillion in 2009
GSC: Standardization Advancing Global Communications