TIA | PulseOnline April 2003, Letter from the President: FCC Broadband Decision Major Victory for Manufacturers and Future of Telecom Industry

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April 2003

Volume 4, Issue 6

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Letter from the President

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FCC Broadband Decision Major Victory for Manufacturers and Future of Telecom Industry

As you are aware, the FCC decided on February 20 that incumbent local exchange carriers (ILECs) would not be required to share new broadband infrastructure with competitors. While we await release of the final rules sometime in the next few weeks, we believe this decision is a major victory for communications equipment manufacturers and for the industry's future.

ILECs, no longer burdened with sharing new broadband networks, will be able to invest to remain competitive. Verizon's March 19 announcement of its intention to make more than 10 million more of its lines digital subscriber line (DSL) capable by the end of 2003, making its high-speed Internet access services available to 80 percent of its customers is an example of why the FCC made the right call in its broadband decision.

With more than 40 million high-speed Internet access subscribers predicted by 2006, the market is simply too large to be ignored. We believe carriers will deploy more DSL equipment and begin to spend more freely on fiber-to-the-home.

TIA's new 2003 Telecommunications Market Review and Forecast, prepared in anticipation of the FCC's decision, details the growing and competitive high-speed Internet connectivity market.

Cable modems continue to dominate this market. Cable modem access accounted for nearly 2.5 million, or 18 percent, more subscribers than DSL in 2002. However, we predict DSL will begin to close the gap, and by 2006 there will be 15.3 million DSL subscribers compared with 16.9 million cable modem subscribers.

While DSL and cable modem revenues will both enjoy double-digit growth over the next few years, ILECs' penetration of the business market will boost DSL services spending to 814.5 billion in 2006, nearly twice the projected spending for cable modems.

The 2003 Market Review also points to fixed wireless, satellite and fiber-to-the-home as growing alternative high-speed Internet access services. Unlicensed wireless, 3G and powerline transmission are also projected to enjoy healthy adoption rates.

The demand for high-speed connectivity bodes well for infrastructure buildout as service providers prepare their networks to support broadband applications. While the industry's turnaround has been slow to come, we do believe 2003 will begin an upward trend, even for the hardest hit wireline network equipment sector. To help members gain insight into the dynamics of the industry's various sectors, we've made a briefing by the Market Review economists available on TIA's Web site.

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April 2003

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