AFC sees small glints of light in 2003

Despite going through what he described as the worst year in his telecom career, AFC Chairman, President, and CEO John Schofield said today that he sees some hope for the remainder of 2003.

While overall carrier capital expense budgets will continue to fall or remain flat, a favorable ruling from the FCC on unbundled network elements will mean more going toward the access side of the network, he said during a presentation at the Banc of America Securities Tech 2003 Conference.

I don’t think anyone expects it to be an immediate solution,” he said. “I think overall there is likely to be a token increase in capital spending. I think we may see spending moving from other parts of the network to access.”

AFC, which reported a 5% increase in revenues last year from 2001, is counting more on a continued network modernization plan from carriers to sustain revenue this year. Network upgrades account for more than 50% of the digital loop carrier market, with new residences accounting for most of the remainder, Schofield said.

For AFC in particular, one of its biggest boosts yet could come from BellSouth, which has relied primarily on Marconi for its DLCs. Asked whether AFC could take advantage of Marconi’s current financial distress, Schofield said that while BellSouth has a vested interested in keeping Marconi around, the situation opens up one very lucrative carrier account.

“In penetrating any large carriers you need typically to go through an RFP process,” he said. “To date they have not decided to go through an RFP. If Marconi continues to have difficulties, there is a possibility BellSouth could issue an RFP.”