sailing into supercomm

On the eve of SUPERCOMM, it seems fitting to take a look at the recent spending patterns of the telecom carriers. So here is what one of our friends in the analyst community is saying.

According to a new report from Infonetics Research, North American service providers’ capital expenditures were just under $58 billion in 2004, an increase of a fraction of a percent from 2003, and are projected to increase 5 percent to $61 billion in 2005. Specifically, RBOCs and Canadian ILECs increased their capex in 2004 and will increase it again in 2005, particularly on IP/MPLS routers, Infonetics says. The firm reports that cable companies decreased their capex between 2003 and 2004, but will increase spending a bit in 2005, mostly on voice equipment and IP/MPLS routers.

“We saw some meaningful changes in the North American capex environment in 2004, with aggregate spending holding steady after three years of drastic cuts, and ILECs increasing their investments,” says Kevin Mitchell, directing analyst for Infonetics Research. “Another noteworthy trend is how fast mobile subscribers are closing in on access lines, with mobile subscribers now at 90 percent of PSTN lines, up from 77 percent at the close of 2003.” He adds it is not unlikely that mobile could overtake access lines this year.

That said, it seems obvious why convergence is the central theme of SUPERCOMM 2005. Hot topics at this year’s SUPERCOMM are expected to include IMS, an architecture for the convergence of voice, data and multimedia applications onto one IP-based core; wireless/ wireline integration in general; Ethernet, both from a business services standpoint and from a network technology standpoint; high-speed versions of DSL, including copper bonding, Ethernet in the First Mile and VDSL; FTTx; IPTV; pseudo wire; and, of course, VoIP.

xchange’s preSUPERCOMM roundup, which discussed most of the above, appeared as the cover story of our May issue.

Charlotte Wolter in this issue provides an advance on VoIP news and developments expected at SUPERCOMM. Also within these pages is xchange’s in-depth look at what telco competitors, the cablecos, are up to regarding multimedia services and wireless/wireline integration.

During SUPERCOMM, xchange will keep you abreast of show news at www.xchangemag.com. And our July hard copy issue will offer several feature-length pieces analyzing news out of the show.

Until next time,

Paula Bernier
Editor in Chief

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