Network equipment sales are expected to grow at double digit rates next year to be worth $16.4 billion after a more modest 2.3 percent increase in sales to $14.4 billion in 2004, according to just released figures from the Telecommunications Industry Association (TIA).
The Association estimates spending by network operators will show high single-digit increases in 2006, with a mid-single-digit advance in 2007. Spending will grow 7.0 percent at a compound annual growth rate (CAGR) through 2007, rising to $18.5 billion.
The TIA's annual forecasts report suggests the recovery from the past three years of decline will be led by the regional Bell operating companies (RBOCs), though it will not recover to the levels of 1999 and 2000. RBOCs face an overall declining market and are looking for new revenue sources and will need to invest in equipment to support them.
The TIA says a significant investment in fiber will be needed for RBOC long-distance, data and television initiatives.
"Over the next three years, we expect a reinvigorated network equipment market. For example, RBOC investment in fiber, migration to next-generation technologies, increased demand for high-speed DSL and rising wireless data traffic all will drive growth. One important underlying assumption to this increase is that the FCC's broadband deregulatory framework remains intact," TIA President Matthew Flanigan said in a statement.
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