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Telecom Bouncing Back, Group Says

Posted on: Wednesday, 15 February 2006, 21:00 CST

DALLAS _ The telecommunications industry is enjoying a sustained rebound from its nasty crash of several years ago, a major trade group said Wednesday.

The Telecommunications Industry Association said Wednesday that revenues for U.S. telecom companies increased 8.9 percent last year, and it projected an average of 9 percent annual growth through 2009.

"The U.S. has turned around and is now on an upward path," said Arthur Gruen, one of the principal authors of the TIA report. "We don't expect spending to be unsustainable, as it was in the late 1990s, and that led to the severe turndown in the early part of the decade."

Gruen, a principal in Wilkofsky Gruen Associates, which prepared the TIA report, said 2005's 8.9 percent growth came on the heels of a 9.5 percent increase in U.S. telecom revenues in 2004.

"That's the second year of high single-digit growth. It's really sustaining the rebound that began in 2004,'' Gruen said.

That's a sharp turnaround from the prior three years, 2001-2003, when the market was weak, he said. In those years, equipment sales were down, "and overall spending was flat or up just a bit," he said.

"This represents that 2004 was not a fluke year, that we are now in a period of sustained growth," he said.

Globally, the TIA said the industry grew 10.6 percent last year, and should maintain 10 percent growth through 2009. Revenues worldwide should reach $3.9 trillion in 2009, with $1.2 trillion in the United States. That compares to $2.7 trillion last year, $857 million of which came in the United States.

The network equipment and facilities segment has recovered more slowly from its 2000 peak than the telecom industry overall. TIA said revenues in that segment totaled $19.9 billion last year, a 61 percent drop from the $51.6 billion in revenues in 2000.

However, the 2005 total marked a 16 percent jump from 2004, which itself climbed 13 percent from 2003.

Gruen said broadband, wireless, public network equipment, professional services and international growth have fueled the telecom recovery. He said high-speed access to the Internet has become the norm.

"In the U.S. in 2005, more people connected to the Internet by broadband connection than dial-up," the first time that broadband surpassed the slower dialup connections, he said. "Broadband will continue to expand while dialup will continue to decline through the remainder of the decade."

Wireless revenues will continue to increase as more people get cellular phone service, and cellular companies expand their services far beyond voice, he said.

"Wireless devices are now being used for just about everything," he said. "Making a phone call is maybe the least of its functions. You can play video games. You can listen to music. There are new services around where you watch television, text messaging and a host of other things that are evolving over time."

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(c) 2006, The Dallas Morning News.

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Source: The Dallas Morning News

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