Local exchange network forecasts for North America

Changes in outside plant, circuit equipment, and switching will affect the future of local exchange carriers, according to the market research report Transforming the Local Exchange Network: Analyses and Forecasts of Technology Change, published by Technology Futures Inc., Austin, TX.

The report concentrates on what it considers the three major investment areas for North American local exchange carriers: outside plant, circuits, and switching.

By 2000, 98% of interoffice plant circuits in use are expected to be on fiber cable. New investment will continue to be in fiber-optic technology, with the metallic carrier share maintaining a steady decline.

The report predicts that from 2000 to 2005, conventional fiber-based digital loop carrier (dlc) will peak, serving 31% of access lines in 2000. Metallic dlc systems will peak at 10% in 1998, and fiber-in-the-loop (fitl) technology will grow and serve 4% of access lines by the end of 2000.

According to the report, fitl systems are expected to displace other feeder technologies by 2000 and serve 36% of access lines by 2005, 85% by 2010, and over 99% by 2015. As for distribution cable, the report acknowledges ongoing consideration of several architectures and anticipates that whichever is chosen will displace the majority of copper investment.

The report presents potential scenarios based on how quickly local exchange carriers will make the transition from copper to fiber. All scenarios assume the conversion is essentially complete between 2010 and 2015, and the forecasts concentrate on home and small business locations.

The report anticipates that 1% of households will use digital services by the end of 1998, 5% by year-end 2000, and 32% by year-end 2005. About 10% of homes will have high-speed digital service (higher than 1.5 Mbits/sec) by year-end 2001 and 50% by year-end 2005. The report anticipates that the 1.5-Mbit/sec rate, which is the current maximum usable bandwidth for home applications, will ease over time, but will meet users` expectations until 2005. After that, the report predicts, a 6-Mbit/sec rate will meet users` needs until 2010, 24 Mbits/sec until 2015, and 100 Mbits/sec thereafter.

The report predicts that in small business locations, most local exchange carriers will follow a path of fitl adoption but will make some use of copper-based xdsl.

When analyzing circuit equipment, the report predicts that all currently deployed non-Synchronous Optical Network (sonet) equipment will be replaced by sonet equipment before 2005. It estimates that 60% of interoffice fiber capability was to be on sonet by the end of 1997, 94% by 2000, and 99% by 2005. Additionally, the adoption of sonet in the loop is forecast to lag behind that in interoffice facilities, reaching 53% adoption by 2000 and 94% by 2005.

When analyzing switching equipment, the report anticipates that analog switching will serve only 4% of access lines by 1999 and 1% by 2001, in contrast to 17% at the end of 1996.

The report contains digital switch forecasts that rely on how quickly local exchange carriers implement Asynchronous Transfer Mode (atm) switches capable of handling voice, video, data, and image traffic. The forecasts imply the obsolescence of the existing local telecommunications infrastructure and adoption of new technology and predict a change from a voice-oriented public telephone network to a public atm-switched multimedia network by 2015.

In addition to forecasting new technology, the $1495 report studies the depreciation rate of equipment. For more information, contact Technology Futures Inc., 13740 Research Boulevard, Building C, Austin, TX, 78750, tel: (800) tek-futr or (512) 258-8898, fax: (512) 258-0087, or e-mail: [email protected]