NXTcomm survey: Spending growth ahead

Consolidation continues to change the shape of the telecom industry on an almost weekly basis, and stock market watchers are girding for a turbulent second half of the year. But according to NXTcomm attendees surveyed by Tellabs and Telephony, it's almost a given that the back half of 2007 will be characterized by growth in network infrastructure spending.

The survey of 678 telecom industry professionals was conducted June 19 and June 20 on the NXTcomm show floor. (It also was conducted last year during NXTcomm predecessor Globalcomm and two years ago at Supercomm.) Nearly all respondents — 96% to be exact — said they believe that network infrastructure spending will increase during the second half of the year. Most notable among the optimists were respondents from service providers. About 47% of them said they believe spending will increase by 8% to 10%.

The suppliers who might benefit from such growth were not as ready to believe the glass is half full. Only 31% of supplier respondents said they thought spending growth up to the double digits is possible.

The survey also indicated that many respondents believe 2007 is the year of mobile video. More than 54% said mobile video is driving growth now or will within one year. Carrier respondents again were much more optimistic than suppliers: 64% agreed compared with only 51% of vendors.

Regarding other technology trends, about 78% of respondents see IPTV driving significant growth within three years. About 42% of respondents said IPTV will be a significant factor in the growth plans of their own companies in the next two to three years, while about 36% said it will be a significant strategic factor within the next year.

“The survey confirms that users are driving the release of new video services such as mobile video and IPTV, and service providers will invest to meet that demand,” said Steve McCarthy, Tellabs executive vice president, global sales and service.

In other areas, 51% of respondents see the convergence of wireless and wireline networks happening within two years. About 30% said it may take three to four years, and 16% said that kind of convergence is five to seven years away.

Additionally, when asked how many subscribers a service provider needs to cover expenses when entering a new market, about 38% of respondents said 11% to 20% of eligible households must be won over, while 28% said only 6% to 10% of households need to sign up. Another 26% suggested that more than 20% of eligible households would need to subscribe to make it worthwhile. About 55% of survey respondents also indicated that cable TV companies represent the biggest competition when entering a new market.