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Overview:
The already downtrodden telecom market is now being hit with an effective ‘double-dip’ recession. Our economy has fallen into a dichotomy of company earnings starting to trend upward, but the labor market going in quite the opposite direction. Companies have trimmed staffs so much, that even with relatively weak sales, they are still able to report very good earnings. This is not going to be sustainable in the long term, because ultimately any level of reduced costs will not support continually lower sales.
The impact of our economy’s ‘jobless recovery’ is being strongly felt in the telecommunications market. It is hard to consider upgrading your Internet access service if you have lost your job, or if you fear that you will! Telecommunication companies (and others) who are able to define and successfully attack new markets will be the winners in this environment.
In early to mid 2002, the reports, "The Recovery Trilogy" led by "The Return of the Telco Market: When?" forecasted a return of the general telco markets in the first half of 2003. While the market is somewhat better, perhaps, it clearly has not recovered as we forecast.
What has happened to prevent this return, and what is the best forecast now for a recovery? These issues are the subject of this report "The Telecom Market: A Delayed Recovery!" from IGI Consulting.
This new report analyzes the current market (both the telecommunications sector and the general market) and provides an authoritative forecast for the telecommunications recovery. Unlike some published reports, the approach used in this report relies on sound analytical tools for forecasting the recovery, and the level of the recovery. It offers a time schedule forecast for the recovery of the market and the level of the recovery. To establish a widely understood basis for stating the level of the recovery, it provides detailed capital expenditure forecasts by the major carriers (IXCs, telcos and Cable companies).
The information in this document will be invaluable to everyone involved in the telecommunications market. Anyone needing to decide when to make expenditures; when to look for price breaks; when to look for new sales; how various sectors of the telecommunications market are likely to be impacted by recovery; sectors that may make new capital expenditures; traffic levels; the nature of traffic in coming years, and many others will find this report their main reference!
The study is illustrated with well over 30 figures containing graphs and drawings for clarity. The methodology used is completely detailed to allow the reader to make his personal judgment as to the approach.
In addition to providing forecasts for market recovery and the level for that recovery, this report:
- Describes and analyzes the changes that have caused a delay in market recovery.
- Provides a new forecast for the growth of High-Speed Access lines, segmented by xDSL, Cable Modem, and RF lines.
- Provides a new forecast for Telco market return.
- Provides a new forecast for total network traffic with an analysis of growth rates.
- Provides a new forecast for VoIP traffic.
- Provides a new forecast for Transatlantic IP traffic.
- Provides a new forecast for B-to-B traffic.
- Provides a new forecast for by year capital expenditures by the major players in this area.
Table of Contents
TABLE OF CONTENTS
TABLE OF FIGURES
THE LIGHTWAVE NETWORK SERIES OF REPORTS
EXECUTIVE SUMMARY
INTRODUCTION
OLD RECOVERY FORECAST
CHANGES THAT HAVE PREVENTED THE FORECASTED RECOVERY
General Economy
DEVELOPMENT OF NEW RECOVERY FORECAST
NEW HIGH-SPEED ACCESS FORECAST
"UP-NETWORK" TRAFFIC IMPLICATIONS OF HIGH-SPEED ACCESSES
REVIEW OF OLD H-S ACCESS FORECAST
NEW FORECAST – H-S LINES
Criteria for New Forecast
New Forecast – H-S Accesses
New H-S Accesses Forecast – Household Penetration Rates
ADOPTION RATES
H-S Access Adoption Rates
PC vs. H-S Adoption Rates
NEW H-S ACCESS FORECAST IMPACT ON TOTAL MARKET RECOVERY
RECOVERY FORECAST METHODOLOGY
COMPARISON OF OLD AND NEW DEMAND FORECASTS
IMPACT OF NEW FORECAST ON EQUIPMENT REQUIREMENTS
THE BOTTOM LINE – DELAYED BUT MUCH STRONGER RECOVERY
NEW NETWORK TRAFFIC FORECAST
Dominance of Data and H-S Accesses
CAPITAL IMPACTS
NEW CAPITAL FORECAST
APPENDIX I – LISTING OF ACRONYMS
APPENDIX II - DATA TRAFFIC FUNDAMENTALS
INTERNET TRAFFIC CALCULATIONS
APPENDIX III – DSLAM TRAFFIC CALCULATION EXAMPLE
ILLUSTRATION OF DATA NODE CALCULATION
Transfer Rate and Busy Hour
Protocol Inefficiencies
Statistical Multiplexing
Peaking
A NUMERICAL EXAMPLE
APPENDIX IV – OTHER TRAFFIC SOURCES
Table of Figures
Figure 1, Executive Summary - Boom in 2004!
Figure 2, Market Recovery Timeline - Old Forecast
Figure 3, xDSL D & F, the Next Boom – Old Forecast
Figure 4, H-S Access Line Growth -Selected Vendors
Figure 5, Up-Network Traffic Impacts
Figure 6, Old H-S Access Forecast
Figure 7, Problems with Old Forecast
Figure 8, CM vs. Actual for Old Forecast
Figure 9, New H-S Access Forecast
Figure 10, New Forecast - xDSL and Comparisons
Figure 11, Cable Modem New Forecast
Figure 12, Household Penetration Comparison
Figure 13, VCRs and PC Adoption Rates
Figure 14, H-S lines vs. PCs and VCRs Adoption Rates
Figure 15, PC Adoption Rate Compared to New H-S Forecast
Figure 16, New Forecast Impact on D&F Chart
Figure 17, New Forecast D&F Chart
Figure 18, Comparison of Old and New Equipment Requirements –xDSL
Figure 19, Total Network Traffic, New and Old Forecast
Figure 20, Network Traffic Annual Growth Percentages
Figure 21, Network Traffic Components - New Forecast
Figure 22, Blown-up Comparison of Traffic Sources
Figure 23, OLD Capital Forecasts 2002-2006 $Bs
Figure 24, Capital Expenditures - New Forecast
Figure 25, Capex Comparison - Old and New Forecasts
Figure 26, Capex - Historical and Forecast
Figure 27, New Forecast for Capex by Segment
Figure 28, Transfer Rate Forecast
Figure 29, Summary of Concepts
Figure 30, DSLAM for Example Calculations
Figure 31, Data for Example
Figure 32, Trunks Required - No Corrections
Figure 33, Trunks Required with Protocol Losses
Figure 34, Trunk Requirements - Protocol Loss and Stat Mux
Figure 35, Trunking Requirements Protocol Loss, Stat Mux and Peaking
Figure 36, Business VoIP Growth
Figure 37, B2B Value Projections
Figure 38, Transatlantic Traffic
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