High revenues forecast for broadband services

Dec. 1, 1998

High revenues forecast for broadband services

A new study by the Strategis Group (Washington, D.C.) predicts that broadband-services revenues will top $161 billion globally by 2003. According to Global Broadband Markets: 1998, businesses using broadband services will more than triple in the next five years, with the number of households increasing nine-fold. Average monthly costs for a business to gain broadband access in 2003 will be about $800. The average household will spend $35 a month, mostly for high-speed Internet access.

Virtually every telecommunications network and service provider is expected to support broadband traffic in the next few years. "Last mile" network operators will provide direct access to end users via their local telephone, cable-television, satellite, fixed wireless, or digital cellular networks. Backbone network providers will also carry increasing amounts of traffic as the number of broadband users grows.

Internet users have been concentrated in relatively few countries, with the United States accounting for more than half of the user base. The United States, Japan, the United Kingdom, Germany, Canada, and Korea account for more than 80% of the world`s Internet users. But that will change to involve more countries in the next few years as infrastructure expands, prices for services decline, content becomes more localized, and applications such as e-commerce grow.

Convergence of technologies will put formerly disparate telecommunications networks on the same playing field. For example, both cable networks and circuit-switched networks may be equally capable of providing high-speed Internet access. The resulting competition will lead to innovation in service delivery and content. It will also bring down prices for end users.

However, without effective competition to incumbent telephone companies, demand will not be met in the near term, says the report. Monopoly providers do not have as much incentive to develop broadband networks and aggressively market broadband service as competing telecommunications providers.

The Strategis Group makes the following global predictions in their report:

Households using broadband will grow from 4.5 million in 1998 to 40.9 million in 2003.

Businesses using broadband will grow from 4.9 million in 1998 to 15.7 million in 2003.

Total broadband-services revenues will grow from $67 billion in 1998 to $161 billion in 2003. Broadband-services revenues are dominated by the business segment, which accounts for approximately 90% to 95% of the total from 1998 to 2003.

Cumulative broadband end-user equipment sales from 1998 to 2003 will reach $21 billion. The residential portion of these sales is projected to account for 35% to 40% of the total during the projection-time horizon.

North America will lead the world with more than 40% of broadband-services revenues in 2003 and cumulative end-user broadband equipment sales from 1998 to 2003.

Considering both business and residential segments, broadband provided over wireline networks is projected to dominate service revenues, accounting for 82% of the total in 2003.

For more information or to purchase the complete report, contact Matthew Smith at the Strategis Group, (202) 530-7502, fax: (202) 293-7933, or e-mail: [email protected]. u

Fiber wins big with wire and cable market growth

While premises copper cable is experiencing solid growth in the overall wire and cable market, the big winner in terms of market growth over the next 10 years will be fiber-optic cable. So says Communications Wire & Cable: U.S. Premise and Outside Plant Markets--Coaxial, Fiber, Twisted Pair, a new report by Allied Business Intelligence Inc. (ABI--Oyster Bay, NY), a research think tank for the telecommunications industry.

Through 2000, annual growth in the market value of copper cable used in U.S. premises applications will grow at a rate of 15% or higher but then will decline to 10% by 2003. Fiber-optic cable, on the other hand, mostly multimode cable in like applications, will increase from 10% in 1998 to as high as 27% in 2003.

ABI`s new report examines the U.S. production and market for the various types of communications wire and cable in light of demand created by new broadband applications. The report cites the Internet for almost single-handedly reviving the market for communications wire and cable in the United States. Prior to the Internet, annual growth in telecommunications outside plant was predictably low. But by the mid-1990s, data-communications replaced traditional analog voice as the dominant application, and people began demanding higher bandwidth and clearer connections.

The majority of the fiber growth stems from growth in the trunk and feeder portions of the telecommunications infrastructure, while copper still dominates the inside cable market. Coaxial cable is being driven by cable-television system rebuilds.

According to ABI, the annual growth rate of copper wire used in premises cabling--mainly unshielded twisted pair (UTP)--has been increasing at a rapid pace, mainly due to greater deployment of local area networks. Fiber-optic cable, however, stands to take an increasingly larger share of this market as the installation requirements for higher levels of UTP become more stringent.

ABI`s complete report on the communications wire and cable market is available by calling (516) 624-3113 or by e-mail: [email protected]. u

Latin America`s singlemode deployment to double

The annual deployment of singlemode fiber-optic cable in Latin America will grow at a compound annual growth rate (CAGR) of nearly 12% over the next five years, according to a new study by KMI Corp. (Newport, RI). Singlemode Fiber-Optic Cable Markets in Latin America, 1997-2003, reports that annual deployment will rise from 1.8 million fiber-km in 1997 to 3.6 million fiber-km in 2003.

The report profiles 11 Latin American countries, including Mexico, Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela. The forecast covers fiber deployment for telephone companies, cable-television providers, and other operators, including electric companies.

A few key findings in KMI`s research include a CAGR of 26.7% for the installed base of fiber from 1997 to 2003. The installed base will rise from 5 million fiber-km in 1997 to 11.5 million km in 2000 to 21 million km in 2003. Most of the fiber in the region will be deployed by telephone operators. Their long-haul deployments will account for the largest share of fiber demand for the rest of the 1990s. Long-haul deployment, however, is expected to decline during the full forecast period. New long-haul installations will account for only 27% of all fiber deployed in 2003, as opposed to 52% in 1998.

Operators reported having enough capacity in place or on the drawing boards to meet their long-distance requirements for the next five years, typically using 24-fiber cable in their long-haul networks. Brazil`s Embratel is the only company planning to use wavelength-division multiplexing to increase long-haul capacity.

Metro and access deployments will grow rapidly, says KMI, particularly after 1998. Metro/access deployment will grow at a CAGR of more than 22% from 1997 to 2003. It will account for 34% of all new fiber installed in 1998 and 60% of all new fiber installed in 2003. With few exceptions, operators in the region plan to limit deployment of fiber in their access networks to large business customers and to remote terminals in digital loop carrier systems. Fiber-to-the-curb is not in prospect except for limited applications in Brazil.

Cable TV will play an important role in the Latin American market as operators use fiber in hybrid fiber/coaxial-cable deployments to upgrade and expand their networks. Region-wide, cable TV will account for 13% of the installed base of fiber by 2003.

For more information or to order the complete study, contact Carole McCormick at KMI Corp., (800) 343-4035 (USA), (401) 849-6771, fax: (401) 847-5866, or e-mail: [email protected]. u

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