Variety is the spice of livelihood

The TMA telecoms show, held in October in Brighton, UK will be lucky to have received half the 25,000-strong crowd of two years ago. Nevertheless, in its 35th year, the three-day event featured plenty of positive nuggets for the industry to glean beside the seaside.

The Communications Management Association (CMA), which organises the show, was more upbeat about the "real" state of the industry than its show attendance figures might suggest. CMA membership numbers around 2,000 telecom managers and engineers, mainly based in the UK, and their total annual spend on telecom services and equipment is an impressive GBP10.8bn (EUR6.5bn).

Chief executive Glen Powell says, "Over the past 10 years, communications has come to be regarded as a commodity industry and its prices have been driven down. But if we listen to the forecasters and analysts, who are largely the same people who stoked up the dot.com investment fiasco, we'd believe the industry is on the verge of collapse. We'd believe that there was an expensive infrastructure that nobody wants, and the prospect of long, hard years with poor revenues and profits, and no investor confidence."

Powell says, "There have certainly been some difficulties over the huge investments in 3G and the problems of some of corporate America's larger companies, but the CMA takes a more positive view. There is no doubt that traffic is growing, with IP traffic said to be doubling on the networks every 13 weeks.

"Customer demand for 'always on' high-speed capacity in the local loop is growing rapidly in nearly every country in Europe, and there are already signs that the much-vaunted glut in fibre in core networks will soon become a shortage."

Some analysts are now taking a more positive view of the potential of the market. Gartner is predicting recovery from mid-2003 onwards in most areas. In contrast, the Butler Group doesn't see any real recovery until early/mid-2004.

Nigel Pitcher, communications director of pan-European carrier Fibernet, says of the market, "I really don't know whether we are at the bottom of the market yet. There is certainly no real increase in investment so far, but there are good things happening in countries like France."

Pitcher adds, "The government in France in partnership with local authorities is enabling the building of local fibre rings which local authorities can continue to own and develop in the interests of local businesses and citizens. (see Analysis LWE.November 2002).

"These authorities are now looking at building capillary networks to increase coverage, and this is the sort of activity that the industry can benefit from."

As a UK-based company, Fibernet criticises the network expansion obstacles now faced by carriers in the UK. "Although the UK government is promoting the deployment of broadband services," says Pitcher, "it isn't doing much for the carriers who provide the backbone to deliver them.

"In the UK we've faced a trebling of business rates charged by local authorities for laying cable and ducts, which does not compare well with countries such as France."

On the state of the European optical components industry, Pitcher says, "The obvious country to watch is China, and that seems to be taking an awful lot of business away from the European manufacturers that remain, with the help of massive state subsidies.

"There are Chinese exhibitors here who have impressed us with some of their technologies, but most of the components in the solutions we use still come from the US."

One big technology area at TMA was the mobile space, with questions as to whether data from the mobile Internet in the GPRS (general packet radio service) format, and eventually in 3G, would help to create sizeable traffic for fixed networks as a result.

Declan Lonergan, European director of wireless research and consulting at analyst Yankee Group, said, "For what corporate users need to do now, the availability of a mature GPRS service is good enough.".He urged users to consider the existing mobile infrastructure, which he said was good enough for today's mobile applications.

Replying to suggestions that the slow take-up of wireless in the business sector is down to users waiting to see what 3G will bring, Lonergan said, "If users think they can't use what's already out there, they probably haven't planned properly."

Even the existing GSM network was appropriate for some applications, said Kary Warnerman, Ericsson Enterprise vice-president of business development. He said, "When 3G arrives, the GPRS networks, and even the GSM ones, will still be around for some time to come and businesses will not lose out from adopting wireless now."

Although it was dull and windy in Brighton, the optimism about the telecoms industry still managed to shine through the gathering clouds — just about.

More in Market Research