Carriers Investing Big in IP

Carriers are betting that our thirst for an ever-growing number of high bandwidth services isn’t going to slake any time soon. That’s the message of three new Infonetics Research reports on telecom carrier capital expenditures.

Service providers in North America, Europe, and Asia Pacific spent a combined $192.8 billion on capital expenditures in 2005, and are projected to increase their investment to $203.1 billion in 2006, according to the reports.

“This is a lot of money, so there is something significant going on,” says the lead author of the reports, Infonetics Principal Analyst Stéphane Téral. “And that significant thing is the migration to IP. What you’ll see is three or four packages bundled together – video, voice, and Internet access.”

The numbers also bring to light another interesting trend: the blurring of meaningful differences between telecom, IT and media companies.

“Tomorrow it’s going to be difficult to know who is who,” explains Téral. For example, Verizon is hiring Hollywood people to deal with content at the same time the company is digging the street in some regions to deploy fiber. “A telco by definition knows how to handle voice but they don’t know video or content. They’re hiring the competence they will need.”

Coming up, Infonetics will soon be publishing market share numbers for the third quarter of 2006. Téral won’t say much about those numbers except that subscriber numbers are on track with industry forecasts.