Business Services Industry

The Telecom Industry Will Not Fail Amid Economic Turmoil According to Yankee Group

Business Wire, Oct 8, 2008

A new report assesses the momentum of the $590 billion Anywhere Economy through the current financial crisis

BOSTON -- Yankee Group today published a report addressing the threats posed by the current financial crisis to the telecom industry and its $590 billion Anywhere Economy. Failing credit, jeopardized revenue and spending reductions are the imminent threats of today's economic downturn that stand to impair the Anywhere revolution, a global transformation toward ubiquitous connectivity. Vendors and service providers, challenged by the potency of the economic turmoil, will find that the momentum toward Anywhere is irreversible, and that the financial crisis will only shape rather than stop the trend.

"While there will be inevitable reverberations throughout the industry, those effects will be relatively small for telcos, but could be harsher for vendors," said Benoot Felten, Yankee Group senior analyst.

The Yankee Group report Will the Anywhere Economy Slow Down? outlines the primary effects of the financial crisis on the telecommunications ecosystem:

* Operators will continue their Anywhere Network[TM] expansion plans. Any changes in network investment will be small. With the emergence of Anywhere being inevitable, companies may curtail spending in the short term but continue to adhere to long-term network buildout strategies.

* Discretionary spending will fall. Every player in the Anywhere Economy will be closely watching their expenditures. This won't affect core revenue, as everyone needs the internet, but it will cap growth for the next 6 months to a year due to fewer upgrades and less new business.

* Big companies will gain the upper hand. Size matters during a financial crisis. Those with greater assets and stability are more likely to do well and have the funds to invest in potential game-changing ideas.

* Operators will squeeze network equipment vendors. Purchases slow and discounts are sought in times of economic trouble. Declines in discretionary revenue and tougher negotiating by large businesses will adversely impact many network equipment vendors.

"In this economic climate, operators and service providers will have more short term leverage to drive the adoption of technology, impact equipment vendors and also take the lead in innovating products and services in the marketplace," said Ashvin Vellody, Yankee Group senior vice president.

About Yankee Group

The people of Yankee Group are the global connectivity experts[TM]--the leading source of insight and counsel trusted by builders, operators and users of connectivity solutions for nearly 40 years. We are uniquely focused on the evolution of Anywhere, and chart the pace of technology change and its effect on networks, consumers and enterprises. Headquartered in Boston, Yankee Group has a global presence including operations in North America, Europe, the Middle East, Africa, Latin America and Asia-Pacific. For more information, visit http://www.yankeegroup.com/.>