TIA: US broadband equipment market to shrink 36% over next 3 years

Despite the expectation of broadband stimulus funds from the federal government in the coming months, US spending on access equipment should fall 27% this year and keep declining for the next two years before springing back to growth, according to a report released today by the Telecommunications Industry Association.

That report -- in which the TIA predicted, for the first time ever, a global telecom industry decline this year (a 3.1% drop followed by 1.2% growth next year) -- projected access equipment spending declines of 9.8% in 2010 and 3.2% in 2011, followed by 18.2% growth in 2012. All told, the domestic broadband equipment market will shrink by more than $3.2 billion (or 36%) over the next three years, TIA said.

“The declines in 2009-10 and the increases in 2011-12 reflect slower growth in broadband subscriptions during the next two years and accelerating growth during 2011-12 in response to the economic cycle,” Arthur Gruen, one of the report’s principal authors, wrote in an email to Telephony today. “With the stimulus not expected to hit the market until 2010 and its impact occurring over the course of the year, we expect the decrease to be noticeably moderate in 2010. With the full impact to begin to be felt in 2011, we are projecting double-digit growth in DSL and cable that year and an overall 18% increase across all categories in 2012.”

Asked about the industry impact of broadband stimulus efforts on a conference call today regarding the new report, TIA President Grant Seiffert said, "It's obvious that broadband stimulus funding will be focused on jobs and hiring folks to do the trench digging, the tower building, the antenna fixing. Those are the obvious areas that will be impacted directly."

Another factor in the coming access market decline appears to be a drop-off in spending on fiber-to-the-premises (FTTP) equipment --which accounted for more than half of all US broadband equipment spending last year -- as Verizon Communications, the country’s biggest FTTP deployer, completes its rollout plans sometime in the next two years. (The company has said it may expand those plans modestly, however.) TIA expects spending on FTTP equipment in the US to drop from a peak of $4.6 billion last year to a trough of $1.3 billion in 2011 – a 72% drop in just three years – before growing again to $1.7 billion in 2012.

Meanwhile, US spending on fixed wireless equipment will grow rapidly for the foreseeable future but from a much smaller base. TIA predicts the sector will grow 214% over the next four years, to $220 million. But that represents just 3% of the total US broadband equipment market in 2012.

And in contrast with broadband, US spending on backbone infrastructure will grow 15% this year in response to traffic growth, TIA said. Much more moderate backbone spending will follow over the next two years and a decline in 2012.