GSC: Standardization Advancing Global Communications TIA’s 2006 Telecommunications Market Review...

GSC: Standardization Advancing Global Communications

TIA’s 2006 Telecommunications Market

Review and Forecast

Briefing

URL for more information: http://www.tiaonline.org/business/research/mrf/index.cfm

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

http://www.tiaonline.org/business/research/mrf/index.cfm

GSC: Standardization Advancing Global Communications 2

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 2009 -- $1.2 trillion in the U.S. and $2.7 trillion internationally

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2000 2002 2004 2006 2008

Global Telecommunications Revenue ($ Millions)

United States International Global


Growth Drivers in 2005

• Broadband• Wireless• IP technology• Public network equipment• Professional services• Latin America, Asia/Pacific, and Middle

East/Africa led international growth


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


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


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


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


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


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

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2000 2002 2004 2006 2008

Network Equipment ($ Billions)


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

Internet Subscribers (Millions)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Broadband Dial-Up


Voice over IP

• Market driven by expanding broadband universe, low prices, and range of features

• E911 issue• VoIP will help stem

landline erosion0

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2003 2004 2005 2006 2007 2007 2009

Residential VoIP Subscribers (Millions)


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

PBX/KTS Revenue ($ Billions)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

IP/Converged Traditional PBX/Key


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

PBX Installed Base (Millions of Lines)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Traditional IP/Converged


Data Transport

• VPNs beginning to cut into leased line, frame relay, and ATM market

• Cost savings

• Scalability

• Accessibility

Data Transport Revenue ($ Billions)

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2004 2005 2006 2007 2008 2009

IP VPNs Legacy Technologies


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

U.S. Wireless Market

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Subscribers (Mil) Revenue ($Bil)


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


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

Landline Market

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Landline Subscribers (Millions)

Landline Revenue ($ Billions)


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

International Telecommunications Revenue ($ Billions)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Europe Asia/Pacific Latin America

Middle East/Africa Canada


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


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

Internet Access Revenue ($ Billions)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Broadband Dial-Up


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

Wireless Subscribers (Millions)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Europe Asia/Pacific

Latin America Middle East/Africa

Canada


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

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Global Telecommunications Revenue ($ Trillions)

GSC: Standardization Advancing Global Communications TIA’s 2006 Telecommunications Market Review...

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