Apr 7, 2004 12:00 PM,

TIA: U.S. network spending to rise 14% next year

By Ed Gubbins

Spending on telecom network equipment in the United States will rise 2.3 % to $14.4 billion in 2004 before reaching $16.4 billion--and a 14% annual growth rate--in 2005, according to the latest report from the Telecommunications Industry Association.

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High single-digit growth will follow in 2006, leading to mid-single digits in 2007, when the nation’s network equipment market will reach $18.5 billion, TIA said.

This year will represent the sector’s first annual expansion since 2000. The domestic network equipment market fell more than 15% in 2003, more than 60% in 2002 and more than 17% in 2001, TIA added.

Drivers for increased equipment spending this year and beyond include incumbent local exchange carrier (ILEC) drives to add long-distance and video customers to offset declining access-line revenues. American ILECs will increase fiber deployment 26.2% this year, and 41.5% next year, TIA said.

TIA’s optimism surrounding ILEC fiber-to-the-premises (FTTP) equipment spending in particular echoes a report issued in February from Infonetics Research, which pointed out that, while the global optical network equipment market shrank 15% last year, the global market for passive optical networking gear--the kind intended for ILEC FTTP deployment--jumped 240% during the year to $182 million.