North American service providers’ capital expenditures totaled $68.6 billion in 2006, up 8% from 2005, and are projected to increase 12% to $76.7 billion in 2010, according to Infonetics Research.
Despite strong M&A activity among telcos like Verizon, MCI, AT&T, BellSouth, and Cingular that created several months of investment disruption, the RBOCs, Canadian ILECs, and cable MSOs increased their capex in 2006, and will increase it again through at least 2009 to sustain their major projects, say Infonetics analysts.
“The third year of the new investment cycle we identified previously is now starting and is expected to plateau in 2009 or 2010,” explains Stéphane Téral, principal analyst at Infonetics Research. “The service provider landscape that has emerged in North America is dominated by two giant telcos, AT&T and Verizon, and a cluster of powerful cable MSOs such as Cox, Time Warner, and Comcast. As everyone is entering everyone else’s turf (telcos are offering IPTV, cable MSOs are offering VoIP, for example), the convergence between information technology, media, Internet, and telecommunications is adding new competitive pressures that are driving this new investment cycle,” he adds.
Infonetics’ report further reveals:
- From 2006 to 2010, North American service providers will spend $369.6 billion on capex.
- AT&T, Sprint Nextel, and Verizon together will make up 61% of total public service provider capex in North America in 2007, driven by AT&T’s Project Lightspeed FTTN and Verizon’s FTTP initiative.
- Incumbent cable MSOs plan to spend more than $15 billion on capex in 2007 as they continue investing in all-IP network migration.
For more details about the report, “Service Provider Capex, Opex, ARPU, and Subscribers, North America,” visit www.infonetics.com.