Ready to roll

Telecommunications Americas, April, 2004 by Sue O'Keefe

Are things finally looking up for telecom? At least one prominent financial analyst thinks so. "On the margin, things are getting better, and we've reached an important inflection point," says Lehman Bros. telecom analyst Steve Levy. In early March, Levy raised his 2004 capital spending forecast, saying carrier capex will grow 6 percent this year. He previously predicted a 5-percent jump. Is 6 percent--or even a 1-percent bump over previous predictions--something to get excited about? Hell, yes. This is more than a blip or bubble (although there are plenty of doubters out there). Levy and others predict this is a long-term trend that could positively impact the bottom line of many equipment vendors. "We have seen gross margins snapping back smartly," Levy says.

[ILLUSTRATION OMITTED]

Already we've seen several Tier 1 carriers make their moves toward incorporating next-gen technologies into their networks. Just a few examples from the past couple of months:

* After declaring its two trials a success, Verizon Wireless has made a major commitment to roll out EVDO services nationwide.

* In its FY2005 plans submitted to the Japanese government, NTT says it has tabbed US$2.5 billion (more than one-third of its planned capex) for expanding its fiber access networks.

* After incorporating softswitches from Sonus Networks in its network, AT&T will launch a VoIP service to consumers and businesses in 100 markets around the United States before the end of 2004 and has set an aggressive target of 1 million VoIP service users by year-end 2005.

* SBC and Verizon have made their picks for FTTP and expect to roll out services over the next few years.

Jack Wimmer, vice president of network architecture and advanced technology for MCI, says his company will upgrade its entire network over the next three to five years. The first step was the introduction of ultra-long haul equipment from Siemens and CIENA into the company's east-west backbone, which Wimmer predicts will allow MCI to reduce the number of networks elements by 50 percent and thus allow a simplified network architecture. KMI Research, a global fiber optic consultancy, predicts AT&T and Sprint, which each have nationwide fiber optic routes dating back to the early 1980s, might also be due for an update and could follow MCI's ULH path.

What's it all mean? Market stabilization, which is a start down the path to recovery. And that is definitely something to get excited about.

[ILLUSTRATION OMITTED]

Editor in Chief