gsc: standardization advancing global communications tia’s 2006 telecommunications market review...
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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
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 $2.7 trillion internationally
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000 2002 2004 2006 2008
Global Telecommunications Revenue ($ Millions)
United States International Global
GSC: Standardization Advancing Global Communications 3
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
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
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
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 $24 billion in 2009, still less than half the total in 2000 but 61% higher than in 2003
0
10
20
30
40
50
60
2000 2002 2004 2006 2008
Network Equipment ($ Billions)
GSC: Standardization Advancing Global Communications 10
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)
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Broadband Dial-Up
GSC: Standardization Advancing Global Communications 11
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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4
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10
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18
2003 2004 2005 2006 2007 2007 2009
Residential VoIP Subscribers (Millions)
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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)
0
1
2
3
4
5
6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
IP/Converged Traditional PBX/Key
GSC: Standardization Advancing Global Communications 13
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)
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Traditional IP/Converged
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Data Transport
• VPNs beginning to cut into leased line, frame relay, and ATM market
• Cost savings
• Scalability
• Accessibility
Data Transport Revenue ($ Billions)
0
5
10
15
20
25
30
2004 2005 2006 2007 2008 2009
IP VPNs Legacy Technologies
GSC: Standardization Advancing Global Communications 15
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
0
50
100
150
200
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300
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Subscribers (Mil) Revenue ($Bil)
GSC: Standardization Advancing Global Communications 16
Landline Developments
• RBOCs are now the major long-distance providers• Standalone long-distance carriers are leaving the market• CLECs without their own facilities are investing in their own
equipment or leaving the market• Cable operators are major competitors• Broadband is now offered in a bundle with telephone
service• VoIP is becoming popular• Television is becoming a necessary component in a
service bundle• Flat-rate pricing is replacing per-minute pricing model for
long-distance
GSC: Standardization Advancing Global Communications 17
Landline Market• Landline subscribership is
falling• Subscribers dropping second
lines in favor of wireless• Broadband cutting into
demand for second lines for dial-up Internet access
• Some people now rely exclusively on wireless
• Flat rate pricing will help landline neutralize wireless advantage
• VoIP will attract subscribers to landline
• Landline erosion will moderate and landline revenue will stabilize
Landline Market
140
150
160
170
180
190
200
210
220
230
240
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Landline Subscribers (Millions)
Landline Revenue ($ Billions)
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 $1.2 trillion
International Telecommunications Revenue ($ Billions)
0
200
400
600
800
1,000
1,200
1,400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Europe Asia/Pacific Latin America
Middle East/Africa Canada
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
Internet Access Revenue ($ Billions)
0
20
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180
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Broadband Dial-Up
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
Wireless Subscribers (Millions)
0
200
400
600
800
1,000
1,200
1,400
1,600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Europe Asia/Pacific
Latin America Middle East/Africa
Canada
GSC: Standardization Advancing Global Communications 22
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 $3.9 trillion in 2009
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2000 2002 2004 2006 2008
Global Telecommunications Revenue ($ Trillions)