Frost & Sullivan reports on European T&M

Fiber Optics Weekly Update, Dec 16, 2005

With considerable advancements in technologies such as asynchronous transfer mode (ATM), synchronous optical network (SONET), Gigabit Ethernet (GbE) and 10-Gigabit Ethernet (10GbE), the European telecommunication industry is seeing accelerated growth. "Internet Protocol (IP) Everywhere" is the new buzzword in the telecommunications industry, and, in the progress towards convergence, service providers are competing aggressively to offer triple-play (telephony, data, and video services) to their customers.

At the recently concluded Broadband World Forum (Europe) in Madrid, Telecom Austria announced the launch of triple-play services by the end of this year. In continuance with this trend, more countries are promising to deploy triple-play services in the near future, and, with the convergence phenomenon creating more complex communications systems and networks, the increased need for test equipment is ensuring better opportunities for vendors in the European communication test equipment market.

Also aiding market growth is the rapid adoption of Internet Protocol (IP) technology. Applications such as voice over Internet protocol (VoIP) and IP multimedia subsystems (IMSs) have served to bring about a massive increase in network traffic, and consequently, the total broadband lines in Europe grew by more than 65.0 percent in 2004, with the United Kingdom, France, Switzerland, and Italy registering the highest growth. As service providers continue to roll out a rich variety of content such as Internet Protocol television (IPTV) and IMS, which require reliable and high-speed connections, the demand for more bandwidth is further fuelling growth in the European communication test equipment market.

However, the dearth of market awareness among end-users is proving a challenge for vendors of communication test equipment. Often, the availability of low-cost, reduced-feature test equipment substitute the need for the primary products of these vendors. Like in the case of VoIP, some services such as Skype are free of cost and hence end-users fail to realize the need for test equipment.

"While test equipment vendors are working towards educating and increasing awareness among end-users of test equipment, the absence of a clear set of standard testing metrics and performance values that service providers can refer to is an additional cause for concern," noted Frost & Sullivan's (http://testandmeasurement.frost.com) Research Analyst Team.

"As there are no set of specific tests that vendors can deploy while testing networks, they are facing questions from service providers regarding what they are supposed to test, how the test should be conducted and which results are acceptable and which are not," Frost & Sullivan added.

Hence, while the International Telecommunications Union (ITU) is highly respected and is the reference standard for market participants, there is an overwhelming need for the European Telecommunication Union and other forums to develop interoperability tests and reference documents that provide a benchmark for the quality of service to be delivered to customers.

In relation to the technology trends, IPTV, which uses Internet Protocol to distribute video/television signals, is gaining momentum. As end-users demand streaming voice, video, and data of the highest quality, this technology offering is creating a good market opportunity for test equipment vendors both at the time of deployment and during the functioning of these networks, and will contribute to increasing their revenues in the future.

The overall European communication test equipment market totaled $311.1 million in 2004 and is likely to reach $580.5 million in 2008. Among the product segments, demand for fiber-optic test equipment (FOTE) and digital subscriber line (DSL) test equipment was the highest. DSL, however, is the most popular access technology in Europe, and demand for DSL test equipment is thus likely to show a strong increase.

"Convergence and consolidation are the buzz words in the communications industry and end users are looking for one-stop test equipment, which tests all types of networks," said Frost & Sullivan. "Further, as interoperability is a key issue when carriers want to offer value-added services with their networks, vendors will have to develop open-ended solutions that are compatible with other vendor solutions."