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Industry upturn predicted for early 2003

Be prepared for a further downward adjustment in the telecom industry this year, but expect an upswing in early 2003. That was the general prediction of some 50 senior executives of the world's leadin...


July 1, 2002  


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Be prepared for a further downward adjustment in the telecom industry this year, but expect an upswing in early 2003. That was the general prediction of some 50 senior executives of the world’s leading telecom service providers who took part in a recent study by Telecommunications & Technologies International, Inc. (TTI) of Chevy Chase, Maryland.

In the company’s report — World Network Equipment Industry Recovery 2002-2003 — the executives discussed their capital expenditure plans for the next few years. Study results found that telecom service providers will spend less on network equipment this year than last, in line with current cost-cutting efforts. Internationally, capital expenditure budgets for 2002 are down 11 per cent from 2001.

In North America alone, budgets are down over seven per cent this year from last. Some companies plan further cuts next year, but budgets overall will level off or even increase slightly in 2003, an increase of slightly less than two per cent over 2002.

For many companies — service providers, equipment manufacturers, suppliers and software developers alike — the difficult adjustments of the past two years are not over and an important transition period lies ahead.

TTI says that “emerging from the executive interviews is a portrait of a far-flung industry that is resizing and redefining itself so that it better corresponds to customer requirements and the realities of the marketplace. Among the major developments revealed is the accelerating pace with which three familiar “sleeper” technologies — IP-based voice and data networks, broadband and third-generation (3G) wireless — are being deployed, quietly revolutionizing telecommunications services and the telecom industry everywhere.”

The study also highlighted the critical role of government in the revitalization of the telecom industry. When executives were asked to assess factors that could directly affect their capital expenditure budgets over the next two years, a majority pointed to regulatory change than to any other single factor.