U.S. long-haul market recovery to begin in 2003

The U.S. long-haul market, which includes DWDM, optical switching, and SONET technologies, will begin to see signs of recovery next year, says a new report from Communications Industry Researchers (CIR—Charlottesville, VA). The market value is expected to approach $3 billion by 2006.

According to the report, the "painful" consolidation process occurring within the telecommunications sector will enable the recovery to begin. Fewer carriers mean less competition and therefore better margins on services. There are also opportunities for those interexchange carriers (IXCs) that have filed bankruptcy; they will be able to restructure debt and unattractive bandwidth service contracts, which leaves more money for equipment purchases.

As the Wall Street crowd abandons the telecom sector, companies face less pressure to meet the unrealistic expectations of investors and analysts, claims the report. In addition, debt-laden carriers can exit the market, and startup IXCs—whose major function was to depress service pricing—will no longer receive funding.

CIR also believes that regional carriers like Digital Teleport and ITC DeltaCom represent potential growth opportunities for equipment suppliers, as second-tier carriers' service pricing has not eroded as quickly as in tier one markets. Within the major carriers, there has been an acknowledgement that certain routes and geographies are straining to keep up with demand, say analysts.

For more details on the report, "Long Haul 2002: The Optical Strategies of Service Providers and Their Perspectives on Vendor Solutions," call 434-984-0245 or visit www.cir-inc.com.

More in Market Research