Report sees big triple play potential for Euro test vendors

December 12, 2005 London, UK -- According to consulting firm Frost & Sullivan, with recent advancements in technologies such as ATM, SONET, Gigabit Ethernet (GbE) and 10-GbE, the European telecommunication test equipment industry is experiencing accelerated growth, as service providers compete aggressively to offer converged, Internet protocol (IP-) based "triple play" services.

According to the firm's recent analysis, as more European countries are promising to deploy triple play services in the near future, and with the convergence phenomenon creating more complex communications systems and networks, an increased need for test equipment is creating sterling opportunities for vendors in the European communication test equipment market.

The firm sees the rapid adoption of IP technology as also aiding the European market for test equipment. The firm says that applications such as voice over Internet protocol (VoIP) and IP multimedia subsystems (IMSs) have served to bring about a massive increase in network traffic; consequently, total broadband lines in Europe grew by more than 65% in 2004, with the UK, France, Switzerland, and Italy registering the highest growth. As service providers continue to roll out a rich variety of content such as Internet Protocol television (IPTV) and IMS, which require reliable and high-speed connections, the firm contends that demand for more bandwidth is further fuelling growth in the European communication test equipment market.

However, the firm says its analysis indicates that a dearth of market awareness among end-users is proving a challenge for vendors of communication test equipment. Often, says the firm, the availability of low-cost, reduced-feature test equipment supplants the need for the primary products of these vendors. As in the case of VoIP, some services (uch as Skype) are free of cost; hence end-users fail to realize the need for test equipment, according to the firm.

"While test equipment vendors are working towards educating and increasing awareness among end-users of test equipment, the absence of a clear set of standard testing metrics and performance values that service providers can refer to is an additional cause for concern," notes the firm's research analyst team. "As there are no set of specific tests that vendors can deploy while testing networks, they are facing questions from service providers regarding what they are supposed to test, how the test should be conducted, and which results are acceptable and which are not."

Hence, according to the firm, while the International Telecommunications Union (ITU) is highly respected and is the reference standard for market participants, there is an overwhelming need for the European Telecommunication Union and other forums to develop interoperability tests and reference documents that provide a benchmark for the quality of service to be delivered to customers.

Further, the firm says that, in relation to the technology trends, IPTV, which uses Internet Protocol to distribute video/television signals, is gaining momentum. According to the firm, as end-users demand streaming voice, video, and data of the highest quality, this technology offering is creating a good market opportunity for test equipment vendors both at the time of deployment as well as during the functioning of these networks - and will contribute to increasing their revenues in the future.

According to the firm's "Strategic Analysis of the European Communications Test Equipment Market," the overall European communication test equipment market totaled $311.1 million in 2004 and is likely to reach $580.5 million in 2008. The firm says that, among the product segments, demand for fiber-optic test equipment (FOTE) and digital subscriber line (DSL) test equipment was the highest. DSL, however, is seen as the most popular access technology in Europe, and demand for DSL test equipment is thus likely to show a strong increase, says the firm.

"Convergence and consolidation are the buzz words in the communications industry and end users are looking for one-stop test equipment, which tests all types of networks," concludes the firm. "Further, as interoperability is a key issue when carriers want to offer value-added services with their networks, vendors will have to develop open-ended solutions that are compatible with other vendor solutions."