IP traffic up 60%; service revenues up 3% in Europe

3 July 2002 -- IP traffic will grow about 60% this year as European service revenues slow to about 3% a year, says Alcatel's Claudio Coltro.

3 July 2002 -- Internet Protocol (IP) traffic will grow about 60% this year as European service revenues slow to about 3% a year, said Claudio Coltro, Director of Network Startegy for Alcatel, at the 6th Annual WDM & Metro Optical Networking Conference in Cannes, France.

Speaking to about 150 delegates on the opening day of the four-day conference, Coltro said Alcatel's IP traffic projections were down sharply from the 200% to 300% growth figures in previous years. However, Coltro said, global bandwith demands indicated that prospects for the optical networking industry were still much more positive than market projections for the PC industry, the semiconductor industry and other high-tech sectors battered during the world economic slowdown.

The challenge for European carriers and equipment suppliers, Coltro said, was to keep pace with bandwith demand this year, as revenues in the service industry levelled off.

Citing marketing projections from International Data Corp, a division of International Data Group, Coltro said that service revenues of carriers in Western Europe will only grow at a 3% compound annual rate through 2003, from USD128bn to USD148bn in 2004. Data services, which only represents about 10% of the market, would grow at a compound annual rate of about 5% during that time frame.

"The key to everything is the flexibility of the network," Coltro said. Faced with rising demand for bandwidth, declines in capital spending budgets and more modest service revenues, Coltro said equipment suppliers and carriers are now beginning to work together to design new services which reuse the installed base and take advantage of off-peak time windows in the evenings when usage of the network infrastucture is minimal.

Coltro also said that captial spending by carriers, once as high as 40% of revenues, would decrease to 20%this year. "That is the only sustainable level," he said.

-- Al Furst, Contributing Editor

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