The Year Ahead

We are seeing some signs of stability in the overall telecom market, with pockets of opportunity in areas like services, metro optical, voice over IP, access and mobile high-speed data. Service providers will continue to work toward boosting bandwidth in the metro networks. You will see more growth at the edge of the networks, as DSL and other high-speed access vehicles gain widespread acceptance and become more of a consumer norm. We think that, until the capacity problems in the metro areas are resolved, service providers will continue to spend less on long-haul networks, as there is still some room for capacity growth in that part of the network.”

— Bob Warstler, president of global sales at Lucent Technologies Inc.

“Wireless operators have been quietly moving to provide integrated services with PBXs, in order to capture more networkbased services and displace premises equipment. If these efforts are successful, the wireless handset will emerge as the primary reachable number for many corporate users, and the PBX will ultimately become a sub-extension of the wireless device. Wireless data, though continuing as the focus of most of the hype in wireless, is probably far less significant than the continued encroachment of wireless on traditional wireline voice revenues — especially at the high end.”

— Tom Kershaw, CTO of SS8 Networks

“Where FTTP is deployed, telecom companies will use it as a marketing tool. From a vendor standpoint, we believe there will be less interest in DSL — which has become table stakes — as a marketing splash. A good example was the fall USTA show in Las Vegas, where we saw a major shift from DSL to telco video.”

— Corey Geiger, vice president of marketing at Advanced Fibre Communications Inc.

“I think additional CLECs will again file for bankruptcy. Operating models do not make financial sense.”

— William F. Lenahan, CEO of KMC Telecom

“Ubiquitous network reach will reign supreme in the years ahead. Customers want to use telecom services for their business. They don’t want to run a telecom company. So, the race is about who can best seamlessly integrate solutions with the widest choices of technologies, carriers and geographies.”

— Dan Moffat, president and CEO of New Edge Networks

“Consolidation must continue; the market space cannot support numerous niche players. We anticipate that these niche players, both service providers and equipment vendors, will combine to increase their service offerings and territories. We also will see a number of acquisitions among larger providers seeking to expand into new markets. Consolidation will occur where there is a complementary fit to services and/or service territory. These efforts will eliminate competition and stabilize pricing.”

— Paul Aiello, vice president of sales and marketing at Progress Telecom

“By far, regulatory uncertainty and potential changes in key rules governing the opening of the market will have the greatest impact on the competitive telecommunications industry this year. The competitive telecom market stands at a crossroads now. Competitive providers are making great strides by increasing their market share and delivering cost-effective, innovative services that their customers desire. But in many respects, competitors are being held hostage by some regulators who believe the deregulation of a few companies that still wield monopoly power will lead to investment in new network infrastructure and the deployment of advanced services. Unfortunately, with history as our guide, we know that giving the Bells the freedoms they desire will not guarantee increased investment and lower prices for consumers. These are the companies that had access to technologies such as touch tone services, wireless and DSL for years, but declined to introduce these innovative services to their captive customers.”

— H. Russell Frisby Jr., CEO of the CompTel/ASCENT Alliance

“The key to maintaining and increasing margins, in my view, is for service providers to move up the value chain with their end customers. They need to focus on differentiation and customization to find the appropriate niche for their offering. For example, take Nextel in the mobile space with its push-to-talk capability, and AT&T with its IP-enabled frame — both of these services found a market niche, making them a near necessity for some vertical markets or applications.”

— Sameer Padhye, vice president of marketing for service providers at Cisco Systems Inc.

“The old [regulatory] rules have got to go. The longer they stay in place, the longer communities wait for upgrades to their telecommunications infrastructure. The longer they stay in place, the longer government makes what should be the consumer’s decisions. And the longer they stay in place, the longer a real economic boost to our nation’s struggling economy remains elusive.”

— Walter M. McCormick Jr., CEO of USTA

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