TIA In the News
Challenging 2009
Stimulus, Data Demand to Help Telecom Recovery
May 22, 2009
Communications Daily
A strong rebound of the U.S. telecom industry is expected in 2011 and 2012, helped by broadband stimulus spending, wireless data growth and more, speakers told a conference hosted by the Telecommunications Industry Association Thursday. But 2009 will be tough as telecom revenue will fall for the first time in decades, they said.
TIA also released its 2009 ICT Market Review & Forecast. Beginning in 2011, stimulus spending will start to have an impact, including job creation, while growth in data traffic will strain network capacity and stimulate investment, TIA analyst Arthur Gruen said. In the U.S., telecom revenue is expected to decrease by 6.4 percent in the next two years, but rebound by 14 percent during 2011-12, the TIA report said. Internet access revenue will exceed $50 billion by 2012, helped by rural broadband expansion, it said. Broadband will help recovery in all areas, TIA President Grant Seiffert said. The sum of increased productivity and revenue amongst all other industry segments whose growth broadband deployment contributes to is often underrated and perhaps immeasurable, he said.
Pent-up demand for network equipment upgrades in the U.S. will be behind the projected recovery during 2011-2012, Gruen said. Growing demand for high-volume data applications is helping all segments of the telecom market, he said. The availability of financing will fuel investment and broadband growth will expand VoIP and IPTV, he said. Gruen cited the report that forecast the two Internet-based services will override the recession with 42 percent growth in combined revenue this year. VoIP made up 19 percent of residential landlines in 2008 and will increase to up to 42 percent in 2012, the report said. Business VoIP subscribers will increase to 7 million in 2012 from 5 million in 2008.
The report forecast U.S. telecom revenue will fall 5.5 percent this year and drop 1 percent more in 2010. Phone companies have been cutting back on capital spending to preserve cash and equipment vendors will bear the brunt of the recession, Gruen said. Though 2009 will be a tough year, wireless is almost resistant to the recession, with an increase in overall spending, he said, calling wireless data strong and voice flat. Mobile Internet access, TV, mapping and location-based services, music and video games, along with text messaging, are boosting the services, handset and infrastructure markets, he said. Businesses will continue to cut spending in the near term, he said, but he noted a strong rebound will occur in 2011 with equipment revenue of up to $117 billion in 2012.
Demand for public network equipment will drive demand, Gruen said.
The projected increases for 2011-12 would be a healthy rebound but won't match double-digit percentage gains the industry saw between 2004 and 2007, TIA said. The main drivers of growth during the past few years -- wireless and broadband -- have matured or are quickly maturing. In the aftermath of the telecom bubble, the U.S. telecom market still managed 6.6 percent growth in 2001, 1.8 percent in 2002, and 3.2 percent in 2003 before bouncing back to close to 10 percent.
Globally, TIA projects a strong rebound after 2010, with 6.4 percent revenue growth in 2011 and a 7.9 percent increase in 2012. Europe will be the hardest hit of regions outside the U.S. in 2009, while Asia Pacific will post large gains in wireless and broadband, Gruen said. The Middle East and Africa will be the least affected, he said, but noted their wireless and broadband will boost the market from a small base.
—Yu-Ting Wang
