Contents:

Chapter I Industry Overview Overview 3 U.S. Market Developments 3 Economic Drivers 8 Technology Drivers 8 Public Policy Drivers 8 Summary 9 Network Services 10 Local Exchange Services 10 Long Distance 10 Network Equipment and Facilities 10 Enterprise and Consumer Markets 11 Enterprise Voice/Data Equipment 11 Voice Processing Equipment 11 Services in Support of Enterprise Networks and CPE 11 Consumer Telecommunications Equipment 11 High-Speed Internet Access 11 Unified Communications 12 Videoconferencing Service Bureau Spending 12 Audioconferencing Service Bureau Spending 12 Web Conferencing 12 Mobile and Wireless Communications 12 Wireless Communications Services 12 Wireless Capital Expenditures and Wi-Fi Equipment 13 Wireless Handsets 13 Services in Support of Wireless Networks and PWLANs 13 Channels 13 International 14 Public Policy Developments 15 Introduction 15 Competition 15 Section 271 15 Section 272 16 Review of Unbundled Network Element Pricing Rules 16 Local Number Portability 17 Reciprocal Compensation 17 Government-Owned Telecommunications 18 High-Speed Internet Access 18 Triennial Review 18 Cable Modem Decision 19 VoIP Regulation 19 Managing Scarce Resources 19 Evolution to 3G Wireless Systems 20 802.XX Standards 20 Spectrum Auctions 21 Spectrum Reallocation Costs 22 Electronic Numbering 22 Public Safety 22 911 Service 22 First Responders 23 CALEA 23 Access for the Disabled 25 Chapter II Network Market Network Overview 29 Introduction 29 Network Equipment 29 Local Exchange 31 Long Distance 32 Support Services 32 Overall Market 33 Local Exchange Services Market 34 Introduction 34 Regulatory Issues 38 Unbundled Network Elements 38 Triennial Review 39 Number Porting 39 Collocation 40 Reciprocal Compensation 40 Area Codes 41 Outlook for the Local Exchange Market 41 Interexchange Market 45 Introduction 45 Access Fees 45 Recent Developments 47 International Long Distance 48 Outlook for the Long-Distance Market 48 Equipment and Facilities 51 Introduction 51 Recent Developments 54 Operations Support Systems 55 Outlook for Telecommunications Equipment 57 Services in Support of Network Infrastructure Equipment 57 Toll-Free Services 58 Introduction 58 Portability 58 Number Availability 59 Outlook for Toll-Free 59 Public Payphones 62 Introduction 62 New Initiatives 63 Regulatory Issues 64 Line Charges 64 IXC Compensation 65 Universal Service Fund 65 Dial-Around Compensation 65 Outlook for Payphones 65 Prepaid Telephony 67 Introduction 67 Prepaid Calling Cards 67 Prepaid Wireless 69 Prepaid Dial Tone 70 Prepaid Internet 70 Chapter III Enterprise and Consumer Market Enterprise and Consumer Market Overview 73 Introduction 73 Enterprise Voice/Data Equipment 75 Consumer Equipment 77 Specialized Services 77 High-Speed Connectivity 77 Unified Communications 77 Conferencing 78 Enterprise Spending on Maintenance, Support and Technical Services 78 PBX Market 81 Introduction 81 Migration to IP 81 PBX Shipments 83 PBX System Revenues 85 Key Telephone System (KTS) Market 87 Introduction 87 Recent Trends 87 Outlook for KTS/Hybrids 89 Centrex/Hosted PBX 92 Introduction 92 IP Centrex/Hosted PBX 92 Managed Telecommunications Service Providers 93 Outlook for Centrex 94 Voice Processing Systems/Services Market 95 Introduction 95 Voice Messaging Equipment 95 Interactive Voice Response Equipment 96 Automatic Call Distributors 96 Predictive Dialing 97 Unified Communications 98 Consumer Telecommunications Equipment Market 100 Introduction 100 Corded Phones 101 Cordless Phones 101 Answering Machines 102 Home Fax Machines 102 Internetworking Equipment 104 Introduction 104 Category 6 Cabling 105 Fiber-Optic LANs 105 Internet Protocol 106 Data Communications and Internetworking Equipment Market 106 Background 107 Internet Access 110 Introduction 110 Analog Modems 110 Soft Modems 111 Cable Modems 111 Open Access 112 Digital Subscriber Lines 113 Other High-Speed Technologies 116 Fixed Wireless 116 Fiber-to-the-Home 116 Satellite 116 Mobile Wireless 117 Total High-Speed Market 117 Leased-Line Market 118 Introduction 118 Recent Developments 118 Outlook for Leased Lines 119 Background 120 Technology 120 Virtual Private Networks 122 Introduction 122 Security 123 Outlook for VPNs 124 Frame Relay 125 Introduction 125 Recent Developments 126 Outlook for Frame Relay 127 Asynchronous Transfer Mode 129 Introduction 129 Recent Developments 129 Outlook for ATM 130 Technology 131 Collaborative Technologies 134 Introduction 134 Videoconferencing 134 Web Conferencing 136 Audioconferencing 137 Data Conferencing 137 Outlook for Collaboration 138 Computer-Telephone Integration 139 Introduction 139 IP Contact Centers 140 Network-Based Call Centers 140 Outlook for CTI 141 Background 142 Chapter IV Mobile and Wireless Communications Market Mobile and Wireless Communications Overview 147 Summary 147 Wireless Communications Services 148 Wireless Communications Handsets 149 Capital Spending 150 Total Wireless Market 151 Third-Generation Technology 151 Public Safety 153 Distribution 153 Wireless Communications 154 Introduction 154 Background 154 Local Number Portability 155 Push to Talk 155 Spectrum Issues 156 Competition and Pricing 156 New Services 157 Wireless Services 158 Handset Market 159 Unlicensed PCS 160 Wireless LANs 162 Introduction 162 Major WLAN Standards 162 802.11b 162 802.11a 163 802.11g 163 Wi-Fi Alliance 163 Market Developments 164 Security 166 802.11i 167 Conclusion 167 Wireless Fidelity 167 Hot Spots 168 Wi–Fi Issues 169 Equipment 170 Paging Market 172 Introduction 172 Recent Developments 172 Paging Services Market 173 Paging Handset Market 174 Mobile Satellite Market 176 Introduction 176 Recent Developments 176 Technology 177 Mobile Data Market 179 Introduction 179 Business Market 179 Consumer Market 180 Chapter V International Markets International Telecommunications Review 183 Overview 183 Transport Services 185 Equipment 186 Support Services 187 Landlines 188 Wireless Communications 188 Trade in Telecommunications Equipment 191 Exports 191 Imports 192 Canada and Mexico 194 Landlines 194 Wireless Market 195 Trade in Telecommunications Equipment 196 Mexico 196 Canada 196 Telecommunications Spending in Canada and Mexico 197 Western European Market 200 Landlines 200 Wireless Market 200 Third-Generation Mobile Phone Communication 201 High-Speed Internet Access 205 Other Developments 206 France 206 Germany 206 United Kingdom 206 Spain 207 Telecommunications Spending in Western Europe 207 Eastern European Market 210 Landlines 210 Wireless Market 211 Recent Developments 212 Other Developments 213 Russia 213 Hungary 213 Poland 214 Telecommunications Spending in Eastern Europe 214 Latin American Market 220 Landlines 220 Wireless Market 220 Recent Developments 222 Internet 222 International Investment 225 Other Developments 225 Brazil 225 Chile 226 Colombia 226 Telecommunications Spending in Latin America 227 Asia/Pacific Market 229 Landlines 229 Wireless Market 230 High-Speed Internet Access 233 3G 233 Other Developments 234 Japan 234 China 234 Korea 235 Australia 235 Hong Kong 236 India 236 Telecommunications Spending in Asia/Pacific 236 List of Sources 241 Acronyms 243List of FiguresFigure II-2.1 Number of CAPs/CLECs 33 Figure II-4.1 Spending by Carriers on Telecommunications Equipment 52 Figure II-4.2 Fiber Miles Deployed 52 Figure II-5.1 Toll-Free Minutes and Costs 58 Figure II-6.1 Number of Payphones 62 Figure III-1.1 Services Spending in Support of Enterprise Customer Premises and Network Systems Equipment 80 Figure III-2.1 U.S. PBX System Shipments 83 Figure III-3.1 KTS System Shipments 88 Figure III-11.1 Distribution of Frame Relay Speeds 126 Figure III-11.2 Frame Relay Bandwidth in DS0s 128 Figure III-12.1 U.S. ATM Bandwidth in DS0s 131 Figure IV-3.1 Distribution of Enterprise Wi-Fi Deployments by Industry 165 Figure IV-3.2 Distribution of Wi-Fi Hot Spots by Venue 168 Figure IV-4.1 Paging Subscribers 172 Figure V-1.1 International Telecommunications Spending 185 Figure V-2.1 U.S. Trade Balance in Telecommunications Equipment 192 Figure V-3.1 Canada and Mexico Telecommunications Spending 199 Figure V-4.1 Western Europe Telecommunications Spending 209 Figure V-5.1 Eastern Europe Telecommunications Spending 219 Figure V-6.1 Latin America Telecommunications Spending 228 Figure V-7.1 DSL Distribution by Region 233 Figure V-7.2 Asia/Pacific Telecommunications Spending 238 List of TablesTable I-1.2 Growth of the Telecommunications Marketplace 5 Table I-1.3 International Telecommunications Spending 6 Table I-1.4 International Telecommunications Spending Growth 6 Table II-1.1 Network Services Market 30 Table II-1.2 Growth of the Network Services Market 30 Table II-2.1 End-User Switched Access Lines 33 Table II-2.2 Growth of End-User Switched Access Lines 33 Table II-2.3 Distribution of End-User Switched Access Lines 34 Table II-2.4 Percentage of Households with CLECs 34 Table II-2.5 End-User Lines by Customer Type 34 Table II-2.6 RBOC Long Distance Applications 35 Table II-2.7 RBOC Long Distance Approvals 36 Table II-2.8 Cable Industry Infrastructure Expenditures 36 Table II-2.9 U.S. Cable Telephone Market 37 Table II-2.10 Growth of the U.S. Cable Telephone Market 37 Table II-2.11 CLEC End-User Lines by Type 38 Table II-2.12 Number of New Area Codes 41 Table II-2.13 Average Local Monthly Phone Bill 42 Table II-2.14 Local Service Market Revenues 43 Table II-2.15 Growth of Local Service Market Revenues 43 Table II-2.16 Local Services Distribution 43 Table II-3.1 Interstate Switched Access Minutes 45 Table II-3.2 Residential and Nonresidential Toll Revenues 46 Table II-3.3 Growth of Residential and Nonresidential Toll Revenues 46 Table II-3.4 Interstate Per-Minute Access Charges 46 Table II-3.5 International Rates per Minute 48 Table II-3.6 International Long-Distance Service 48 Table II-3.7 Transatlantic Cable Systems 49 Table II-3.8 Toll-Service Revenues by Category 50 Table II-3.9 Growth of Toll-Service Revenues by Category 50 Table II-4.1 Spending by Carriers on Telecommunications Equipment by Category 51 Table II-4.2 Growth of Spending by Carriers on Telecommunications Equipment by Category 51 Table II-4.3 Annual Single-Mode Fiber Deployment 53 Table II-4.4 Growth of Annual Single-Mode Fiber Deployment 53 Table II-4.5 OSS Spending by Application 56 Table II-4.6 Growth of OSS Spending by Application 56 Table II-4.7 Spending on Services in Support of Network Infrastructure Equipment 57 Table II-4.8 Growth of Spending on Services in Support of Network Infrastructure Equipment 57 Table II-4.9 Distribution of Spending on Services in Support of Network Infrastructure Equipment 57 Table II-5.1 Available Toll-Free Numbers 59 Table II-5.2 Working Toll-Free Numbers 59 Table II-5.3 Toll-Free Minutes of Use 60 Table II-5.4 Change in Toll-Free Minutes of Use 60 Table II-5.5 Residential Toll-Free Minutes of Use 60 Table II-5.6 Toll-Free Market 61 Table II-5.7 Growth of the Toll-Free Market 61 Table II-6.1 Number of Payphones 63 Table II-6.2 Growth in Number of Payphones 63 Table II-6.3 Worldwide Average Web Payphone Revenue 63 Table II-6.4 Web Payphones 64 Table II-6.5 Public Payphone Market 66 Table II-7.1 Prepaid Telephony Revenues 67 Table II-7.2 Growth of Prepaid Telephony Revenues 67 Table II-7.3 Distribution of Prepaid Telephony Revenues 67 Table II-7.4 Prepaid Calling Card Revenues 68 Table II-7.5 Prepaid Calling Card Usage, 1st Quarter 2003 68 Table II-7.6 Prepaid Calling Card Retail Rate per Minute 68 Table II-7.7 Gross Margin per Minute 68 Table II-7.8 Percent of Prepaid Cards Sold by Location, 2002 69 Table II-7.9 Percent of Prepaid Providers Selling Cards by Location, 2002 69 Table II-7.10 Percent of Rechargeable Prepaid Calling Cards Sold that Are Recharged 69 Table II-7.11 Wireless Penetration by Selected Age Groups, 2002 70 Table II-7.12 Prepaid Wireless Market 70 Table II-7.13 Growth of the Prepaid Wireless Market 70 Table III-1.1 Enterprise and Consumer Market 73 Table III-1.2 Growth of the Enterprise and Consumer Market 74 Table III-1.3 Enterprise Voice/Data Equipment Spending 76 Table III-1.4 Growth of Enterprise Voice/Data Equipment Spending 76 Table III-1.5 Voice/Data High-Speed Services Spending 78 Table III-1.6 Growth of Voice/Data High-Speed Services Spending 78 Table III-1.7 Services Spending in Support of Enterprise Customer Premises and Network Systems Equipment 79 Table III-1.8 Growth of Services Spending in Support of Enterprise Customer Premises and Network Systems Equipment 79 Table III-2.1 PBX Line Shipments 84 Table III-2.2 Growth of PBX Line Shipments 84 Table III-2.3 Distribution of PBX Line Shipments by System Size 85 Table III-2.4 PBX Line Shipments by Type 86 Table III-2.5 Growth of PBX Line Shipments by Type 86 Table III-2.6 PBX Revenues 86 Table III-3.1 KTS/Hybrid Station Shipments 90 Table III-3.2 Growth of KTS/Hybrid Station Shipments 90 Table III-3.3 KTS/Hybrid Station Shipments by Type 90 Table III-3.4 Growth of KTS/Hybrid Station Shipments by Type 90 Table III-3.5 KTS/Hybrid Market 91 Table III-3.6 Growth of the KTS/Hybrid Market 91 Table III-4.1 Centrex/PBX Installed Base by System Size, 2002 92 Table III-4.2 IP Centrex/Hosted PBX Revenues 93 Table III-4.3 Centrex Installed Base 94 Table III-5.1 Voice Processing Equipment and Services Market 95 Table III-5.2 Growth of the Voice Processing Equipment and Services Market 95 Table III-6.1 Traditional Consumer Telecommunications Market 100 Table III-6.2 Growth of the Traditional Consumer Telecommunications Market 100 Table III-6.3 Distribution of Traditional Shipments and Spending, by Category 101 Table III-6.4 Household Penetration of Telephone Equipment 101 Table III-7.1 Ethernet Standards 103 Table III-7.2 Metro Ethernet Services Revenues 104 Table III-7.3 IP Market 106 Table III-7.4 Growth of IP Market 106 Table III-7.5 Network Traffic by Type 106 Table III-7.6 Growth of Network Traffic by Type 106 Table III-7.7 Distribution of Network Traffic by Type 106 Table III-7.8 IP Applications Services Revenues 107 Table III-7.9 Data Communications and Internetworking Equipment Market 107 Table III-7.10 Growth of the Data Communications and Internetworking Equipment Market 108 Table III-7.11 Open Systems Interconnection Model 108 Table III-8.1 Percentage of ZIP Codes with High-Speed Lines in Service 110 Table III-8.2 U.S. Dial-Up Internet Subscribers 110 Table III-8.3 Internet Usage by Technology 113 Table III-8.4 Observed Network Speeds 113 Table III-8.5 Cable Modem Market 113 Table III-8.6 Growth of the Cable Modem Market 113 Table III-8.7 U.S. DSL Subscribers 114 Table III-8.8 Growth of U.S. DSL Subscribers 114 Table III-8.9 U.S. DSL Average Monthly Spending 115 Table III-8.10 Change in U.S. DSL Average Monthly Spending 115 Table III-8.11 DSL Market 115 Table III-8.12 Growth of the DSL Market 115 Table III-8.13 U.S. High-Speed Subscribers by Access Technology 116 Table III-8.14 Growth of U.S. High-Speed Subscribers by Access Technology 116 Table III-8.15 U.S. High-Speed Services Spending 117 Table III-8.16 Growth of U.S. High-Speed Services Spending 117 Table III-9.1 North American Digital Signal Hierarchy 118 Table III-9.2 U.S. Broadband Data Services 2003 118 Table III-9.3 T-1 Penetration by Industry 119 Table III-9.4 U.S. Leased-Line Bandwidth 119 Table III-9.5 U.S. Leased-Line Market 120 Table III-10.1 Top 5 Dedicated IP VPN Drivers 124 Table III-11.1 U.S. Frame Relay Ports 127 Table III-11.2 U.S. Frame Relay Market 128 Table III-11.3 Growth of the U.S. Frame Relay Market 128 Table III-12.1 U.S. ATM Market 130 Table III-12.2 Growth of the U.S. ATM Market 130 Table III-12.3 U.S. ATM Ports 131 Table III-13.1 Videoconferencing Market 135 Table III-13.2 Growth of the Videoconferencing Market 135 Table III-13.3 Web-Conferencing Services Market 136 Table III-13.4 Audioconferencing Service Bureau Market 137 Table III-13.5 Overall Collaboration Market 138 Table III-13.6 Growth of the Overall Collaboration Market 138 Table III-14.1 U.S. CTI Market 141 Table III-14.2 Growth of the U.S. CTI Market 141 Table IV-1.1 Spectrum Summary 147 Table IV-1.2 Wireless Subscribers 148 Table IV-1.3 Growth of Wireless Subscribers 148 Table IV-1.4 Wireless Communications Services Spending 149 Table IV-1.5 Growth of Wireless Communications Services Spending 149 Table IV-1.6 Wireless Communications Handset Spending 150 Table IV-1.7 Change in Wireless Communications Handset Spending 150 Table IV-1.8 Wireless Equipment Spending 151 Table IV-1.9 Growth of Wireless Equipment Spending 151 Table IV-1.10 Wireless Communications Spending 152 Table IV-1.11 Growth of Wireless Communications Spending 152 Table IV-2.1 Selected Nationwide Calling Plans 156 Table IV-2.2 Average Revenue per Minute 157 Table IV-2.3 Wireless Telephony Market 158 Table IV-2.4 Growth in Wireless Telephony Market 158 Table IV-2.5 Wireless Handset Sales 160 Table IV-2.6 Growth of Wireless Handset Sales 160 Table IV-3.1 WLAN Enterprise Spending 165 Table IV-3.2 WLAN Enterprise Spending Growth 165 Table IV-3.3 Global Public Hot-Spot Market 166 Table IV-3.4 Number of U.S. Hot Spots by Venue 168 Table IV-3.5 Growth of U.S. Hot Spots by Venue 168 Table IV-3.6 Wi-Fi Services Spending 170 Table IV-3.7 Wi-Fi Equipment Spending 171 Table IV-3.8 Growth of Wi-Fi Equipment Spending 171 Table IV-4.1 Paging Service Market 174 Table IV-4.2 Change in Paging Service Market 174 Table IV-4.3 Paging Handset Market 175 Table IV-4.4 Change in Paging Handset Market 175 Table IV-5.1 Global MSS Terminals 176 Table IV-5.2 Global MSS Revenues 177 Table IV-6.1 Personal Digital Assistant Market 179 Table IV-6.2 Growth in Personal Digital Assistant Market 179 Table IV-6.3 Drawbacks to Using Data Services on Mobile Devices 180 Table V-1.1 International Telecommunications Spending 184 Table V-1.2 Growth of International Telecommunications Spending 184 Table V-1.3 Wi-Fi Hot Spots Outside the United States 186 Table V-1.4 Spending on Services in Support of Telecommunications Equipment 187 Table V-1.5 Growth of Spending on Services in Support of Telecommunications Equipment 187 Table V-1.6 Landlines 188 Table V-1.7 Growth of Landlines 188 Table V-1.8 Landlines per 100 Inhabitants 189 Table V-1.9 Growth of Landlines per 100 Inhabitants 189 Table V-1.10 Wireless Subscribers 189 Table V-1.11 Growth of Wireless Subscribers 189 Table V-1.12 Wireless Subscribers per 100 Inhabitants 190 Table V-1.13 Growth of Wireless Subscribers per 100 Inhabitants 190 Table V-2.1 U.S. Trade in Telecommunications Equipment 191 Table V-2.2 Change in U.S. Trade in Telecommunications Equipment 191 Table V-2.3 U.S. Exports of Telecommunications Equipment by Leading Countries 192 Table V-2.4 U.S. Imports of Telecommunications Equipment by Leading Countries 193 Table V-3.1 Landlines in Canada and Mexico 194 Table V-3.2 Growth of Landlines in Canada and Mexico 194 Table V-3.3 Landlines per 100 Inhabitants in Canada and Mexico 194 Table V-3.4 Growth of Landlines per 100 Inhabitants in Canada and Mexico 194 Table V-3.5 Wireless Subscribers in Canada and Mexico 195 Table V-3.6 Growth of Wireless Subscribers in Canada and Mexico 195 Table V-3.7 Wireless Subscribers per 100 Inhabitants in Canada and Mexico 195 Table V-3.8 Growth of Wireless Subscribers per 100 Inhabitants in Canada and Mexico 195 Table V-3.9 U.S. Telecommunications Equipment Trade in Canada and Mexico 196 Table V-3.10 Wireless Subscribers in Mexico, March 2003 196 Table V-3.11 Share of Service Revenues in Canada 197 Table V-3.12 High-Speed Subscribers in Canada 197 Table V-3.13 Canada and Mexico Telecommunications Spending 198 Table V-3.14 Growth of Canada and Mexico Telecommunications Spending 198 Table V-4.1 Landlines in Western Europe 200 Table V-4.2 Growth in Landlines in Western Europe 201 Table V-4.3 Landlines per 100 Inhabitants in Western Europe 202 Table V-4.4 Growth of Landlines per 100 Inhabitants in Western Europe 202 Table V-4.5 Wireless Subscribers in Western Europe 203 Table V-4.6 Growth of Wireless Subscribers in Western Europe 203 Table V-4.7 Wireless Subscribers per 100 Inhabitants in Western Europe 204 Table V-4.8 Growth of Wireless Subscribers per 100 Inhabitants in Western Europe 204 Table V-4.9 EU 3G Licensing Summary 205 Table V-4.10 Western Europe 3G License Cost by Major Operator 205 Table V-4.11 High-Speed Internet Subscribers in Western Europe 205 Table V-4.12 Western Europe Telecommunications Spending 208 Table V-4.13 Growth of Western Europe Telecommunications Spending 208 Table V-5.1 Landlines in Eastern Europe 210 Table V-5.2 Growth of Landlines in Eastern Europe 211 Table V-5.3 Landlines per 100 Inhabitants in Eastern Europe 212 Table V-5.4 Growth of Landlines per 100 Inhabitants in Eastern Europe 213 Table V-5.5 Wireless Subscribers in Eastern Europe 214 Table V-5.6 Growth of Wireless Subscribers in Eastern Europe 215 Table V-5.7 Wireless Subscribers per 100 Inhabitants in Eastern Europe 216 Table V-5.8 Growth of Wireless Subscribers per 100 Inhabitants in Eastern Europe 217 Table V-5.9 Eastern Europe Telecommunications Spending 218 Table V-5.10 Growth of Eastern Europe Telecommunications Spending 218 Table V-6.1 Landlines in Latin America 220 Table V-6.2 Growth of Landlines in Latin America 221 Table V-6.3 Landlines per 100 Inhabitants in Latin America 222 Table V-6.4 Growth of Landlines per 100 Inhabitants in Latin America 222 Table V-6.5 Wireless Subscribers in Latin America 223 Table V-6.6 Growth of Wireless Subscribers in Latin America 223 Table V-6.7 Wireless Subscribers per 100 Inhabitants in Latin America 224 Table V-6.8 Growth of Wireless Subscribers per 100 Inhabitants in Latin America 224 Table V-6.9 Internet Usage in Latin America 225 Table V-6.10 Latin America Telecommunications Spending 226 Table V-6.11 Growth of Latin America Telecommunications Spending 227 Table V-7.1 Landines in Asia/Pacific 229 Table V-7.2 Growth of Landlines in Asia/Pacific 229 Table V-7.3 Landlines per 100 Inhabitants in Asia/Pacific 230 Table V-7.4 Growth of Landlines per 100 Inhabitants in Asia/Pacific 230 Table V-7.5 Wireless Subscribers in Asia/Pacific 231 Table V-7.6 Growth of Wireless Subscribers in Asia/Pacific 231 Table V-7.7 Wireless Subscribers per 100 Inhabitants in Asia/Pacific 232 Table V-7.8 Growth of Wireless Subscribers per 100 Inhabitants in Asia/Pacific 232 Table V-7.9 Asia/Pacific Telecommunications Spending 237 Table V-7.10 Growth of Asia/Pacific Telecommunications Spending 237 Table I-1.2 Growth of the Telecommunications Marketplace 5 Table I-1.3 International Telecommunications Spending 6 Table I-1.4 International Telecommunications Spending Growth 6 Table II-1.1 Network Services Market 30 Table II-1.2 Growth of the Network Services Market 30 Table II-2.1 End-User Switched Access Lines 33 Table II-2.2 Growth of End-User Switched Access Lines 33 Table II-2.3 Distribution of End-User Switched Access Lines 34 Table II-2.4 Percentage of Households with CLECs 34 Table II-2.5 End-User Lines by Customer Type 34 Table II-2.6 RBOC Long Distance Applications 35 Table II-2.7 RBOC Long Distance Approvals 36 Table II-2.8 Cable Industry Infrastructure Expenditures 36 Table II-2.9 U.S. Cable Telephone Market 37 Table II-2.10 Growth of the U.S. Cable Telephone Market 37 Table II-2.11 CLEC End-User Lines by Type 38 Table II-2.12 Number of New Area Codes 41 Table II-2.13 Average Local Monthly Phone Bill 42 Table II-2.14 Local Service Market Revenues 43 Table II-2.15 Growth of Local Service Market Revenues 43 Table II-2.16 Local Services Distribution 43 Table II-3.1 Interstate Switched Access Minutes 45 Table II-3.2 Residential and Nonresidential Toll Revenues 46 Table II-3.3 Growth of Residential and Nonresidential Toll Revenues 46 Table II-3.4 Interstate Per-Minute Access Charges 46 Table II-3.5 International Rates per Minute 48 Table II-3.6 International Long-Distance Service 48 Table II-3.7 Transatlantic Cable Systems 49 Table II-3.8 Toll-Service Revenues by Category 50 Table II-3.9 Growth of Toll-Service Revenues by Category 50 Table II-4.1 Spending by Carriers on Telecommunications Equipment by Category 51 Table II-4.2 Growth of Spending by Carriers on Telecommunications Equipment by Category 51 Table II-4.3 Annual Single-Mode Fiber Deployment 53 Table II-4.4 Growth of Annual Single-Mode Fiber Deployment 53 Table II-4.5 OSS Spending by Application 56 Table II-4.6 Growth of OSS Spending by Application 56 Table II-4.7 Spending on Services in Support of Network Infrastructure Equipment 57 Table II-4.8 Growth of Spending on Services in Support of Network Infrastructure Equipment 57 Table II-4.9 Distribution of Spending on Services in Support of Network Infrastructure Equipment 57 Table II-5.1 Available Toll-Free Numbers 59 Table II-5.2 Working Toll-Free Numbers 59 Table II-5.3 Toll-Free Minutes of Use 60 Table II-5.4 Change in Toll-Free Minutes of Use 60 Table II-5.5 Residential Toll-Free Minutes of Use 60 Table II-5.6 Toll-Free Market 61 Table II-5.7 Growth of the Toll-Free Market 61 Table II-6.1 Number of Payphones 63 Table II-6.2 Growth in Number of Payphones 63 Table II-6.3 Worldwide Average Web Payphone Revenue 63 Table II-6.4 Web Payphones 64 Table II-6.5 Public Payphone Market 66 Table II-7.1 Prepaid Telephony Revenues 67 Table II-7.2 Growth of Prepaid Telephony Revenues 67 Table II-7.3 Distribution of Prepaid Telephony Revenues 67 Table II-7.4 Prepaid Calling Card Revenues 68 Table II-7.5 Prepaid Calling Card Usage, 1st Quarter 2003 68 Table II-7.6 Prepaid Calling Card Retail Rate per Minute 68 Table II-7.7 Gross Margin per Minute 68 Table II-7.8 Percent of Prepaid Cards Sold by Location, 2002 69 Table II-7.9 Percent of Prepaid Providers Selling Cards by Location, 2002 69 Table II-7.10 Percent of Rechargeable Prepaid Calling Cards Sold that Are Recharged 69 Table II-7.11 Wireless Penetration by Selected Age Groups, 2002 70 Table II-7.12 Prepaid Wireless Market 70 Table II-7.13 Growth of the Prepaid Wireless Market 70 Table III-1.1 Enterprise and Consumer Market 73 Table III-1.2 Growth of the Enterprise and Consumer Market 74 Table III-1.3 Enterprise Voice/Data Equipment Spending 76 Table III-1.4 Growth of Enterprise Voice/Data Equipment Spending 76 Table III-1.5 Voice/Data High-Speed Services Spending 78 Table III-1.6 Growth of Voice/Data High-Speed Services Spending 78 Table III-1.7 Services Spending in Support of Enterprise Customer Premises and Network Systems Equipment 79 Table III-1.8 Growth of Services Spending in Support of Enterprise Customer Premises and Network Systems Equipment 79 Table III-2.1 PBX Line Shipments 84 Table III-2.2 Growth of PBX Line Shipments 84 Table III-2.3 Distribution of PBX Line Shipments by System Size 85 Table III-2.4 PBX Line Shipments by Type 86 Table III-2.5 Growth of PBX Line Shipments by Type 86 Table III-2.6 PBX Revenues 86 Table III-3.1 KTS/Hybrid Station Shipments 90 Table III-3.2 Growth of KTS/Hybrid Station Shipments 90 Table III-3.3 KTS/Hybrid Station Shipments by Type 90 Table III-3.4 Growth of KTS/Hybrid Station Shipments by Type 90 Table III-3.5 KTS/Hybrid Market 91 Table III-3.6 Growth of the KTS/Hybrid Market 91 Table III-4.1 Centrex/PBX Installed Base by System Size, 2002 92 Table III-4.2 IP Centrex/Hosted PBX Revenues 93 Table III-4.3 Centrex Installed Base 94 Table III-5.1 Voice Processing Equipment and Services Market 95 Table III-5.2 Growth of the Voice Processing Equipment and Services Market 95 Table III-6.1 Traditional Consumer Telecommunications Market 100 Table III-6.2 Growth of the Traditional Consumer Telecommunications Market 100 Table III-6.3 Distribution of Traditional Shipments and Spending, by Category 101 Table III-6.4 Household Penetration of Telephone Equipment 101 Table III-7.1 Ethernet Standards 103 Table III-7.2 Metro Ethernet Services Revenues 104 Table III-7.3 IP Market 106 Table III-7.4 Growth of IP Market 106 Table III-7.5 Network Traffic by Type 106 Table III-7.6 Growth of Network Traffic by Type 106 Table III-7.7 Distribution of Network Traffic by Type 106 Table III-7.8 IP Applications Services Revenues 107 Table III-7.9 Data Communications and Internetworking Equipment Market 107 Table III-7.10 Growth of the Data Communications and Internetworking Equipment Market 108 Table III-7.11 Open Systems Interconnection Model 108 Table III-8.1 Percentage of ZIP Codes with High-Speed Lines in Service 110 Table III-8.2 U.S. Dial-Up Internet Subscribers 110 Table III-8.3 Internet Usage by Technology 113 Table III-8.4 Observed Network Speeds 113 Table III-8.5 Cable Modem Market 113 Table III-8.6 Growth of the Cable Modem Market 113 Table III-8.7 U.S. DSL Subscribers 114 Table III-8.8 Growth of U.S. DSL Subscribers 114 Table III-8.9 U.S. DSL Average Monthly Spending 115 Table III-8.10 Change in U.S. DSL Average Monthly Spending 115 Table III-8.11 DSL Market 115 Table III-8.12 Growth of the DSL Market 115 Table III-8.13 U.S. High-Speed Subscribers by Access Technology 116 Table III-8.14 Growth of U.S. High-Speed Subscribers by Access Technology 116 Table III-8.15 U.S. High-Speed Services Spending 117 Table III-8.16 Growth of U.S. High-Speed Services Spending 117 Table III-9.1 North American Digital Signal Hierarchy 118 Table III-9.2 U.S. Broadband Data Services 2003 118 Table III-9.3 T-1 Penetration by Industry 119 Table III-9.4 U.S. Leased-Line Bandwidth 119 Table III-9.5 U.S. Leased-Line Market 120 Table III-10.1 Top 5 Dedicated IP VPN Drivers 124 Table III-11.1 U.S. Frame Relay Ports 127 Table III-11.2 U.S. Frame Relay Market 128 Table III-11.3 Growth of the U.S. Frame Relay Market 128 Table III-12.1 U.S. ATM Market 130 Table III-12.2 Growth of the U.S. ATM Market 130 Table III-12.3 U.S. ATM Ports 131 Table III-13.1 Videoconferencing Market 135 Table III-13.2 Growth of the Videoconferencing Market 135 Table III-13.3 Web-Conferencing Services Market 136 Table III-13.4 Audioconferencing Service Bureau Market 137 Table III-13.5 Overall Collaboration Market 138 Table III-13.6 Growth of the Overall Collaboration Market 138 Table III-14.1 U.S. CTI Market 141 Table III-14.2 Growth of the U.S. CTI Market 141 Table IV-1.1 Spectrum Summary 147 Table IV-1.2 Wireless Subscribers 148 Table IV-1.3 Growth of Wireless Subscribers 148 Table IV-1.4 Wireless Communications Services Spending 149 Table IV-1.5 Growth of Wireless Communications Services Spending 149 Table IV-1.6 Wireless Communications Handset Spending 150 Table IV-1.7 Change in Wireless Communications Handset Spending 150 Table IV-1.8 Wireless Equipment Spending 151 Table IV-1.9 Growth of Wireless Equipment Spending 151 Table IV-1.10 Wireless Communications Spending 152 Table IV-1.11 Growth of Wireless Communications Spending 152 Table IV-2.1 Selected Nationwide Calling Plans 156 Table IV-2.2 Average Revenue per Minute 157 Table IV-2.3 Wireless Telephony Market 158 Table IV-2.4 Growth in Wireless Telephony Market 158 Table IV-2.5 Wireless Handset Sales 160 Table IV-2.6 Growth of Wireless Handset Sales 160 Table IV-3.1 WLAN Enterprise Spending 165 Table IV-3.2 WLAN Enterprise Spending Growth 165 Table IV-3.3 Global Public Hot-Spot Market 166 Table IV-3.4 Number of U.S. Hot Spots by Venue 168 Table IV-3.5 Growth of U.S. Hot Spots by Venue 168 Table IV-3.6 Wi-Fi Services Spending 170 Table IV-3.7 Wi-Fi Equipment Spending 171 Table IV-3.8 Growth of Wi-Fi Equipment Spending 171 Table IV-4.1 Paging Service Market 174 Table IV-4.2 Change in Paging Service Market 174 Table IV-4.3 Paging Handset Market 175 Table IV-4.4 Change in Paging Handset Market 175 Table IV-5.1 Global MSS Terminals 176 Table IV-5.2 Global MSS Revenues 177 Table IV-6.1 Personal Digital Assistant Market 179 Table IV-6.2 Growth in Personal Digital Assistant Market 179 Table IV-6.3 Drawbacks to Using Data Services on Mobile Devices 180 Table V-1.1 International Telecommunications Spending 184 Table V-1.2 Growth of International Telecommunications Spending 184 Table V-1.3 Wi-Fi Hot Spots Outside the United States 186 Table V-1.4 Spending on Services in Support of Telecommunications Equipment 187 Table V-1.5 Growth of Spending on Services in Support of Telecommunications Equipment 187 Table V-1.6 Landlines 188 Table V-1.7 Growth of Landlines 188 Table V-1.8 Landlines per 100 Inhabitants 189 Table V-1.9 Growth of Landlines per 100 Inhabitants 189 Table V-1.10 Wireless Subscribers 189 Table V-1.11 Growth of Wireless Subscribers 189 Table V-1.12 Wireless Subscribers per 100 Inhabitants 190 Table V-1.13 Growth of Wireless Subscribers per 100 Inhabitants 190 Table V-2.1 U.S. Trade in Telecommunications Equipment 191 Table V-2.2 Change in U.S. Trade in Telecommunications Equipment 191 Table V-2.3 U.S. Exports of Telecommunications Equipment by Leading Countries 192 Table V-2.4 U.S. Imports of Telecommunications Equipment by Leading Countries 193 Table V-3.1 Landlines in Canada and Mexico 194 Table V-3.2 Growth of Landlines in Canada and Mexico 194 Table V-3.3 Landlines per 100 Inhabitants in Canada and Mexico 194 Table V-3.4 Growth of Landlines per 100 Inhabitants in Canada and Mexico 194 Table V-3.5 Wireless Subscribers in Canada and Mexico 195 Table V-3.6 Growth of Wireless Subscribers in Canada and Mexico 195 Table V-3.7 Wireless Subscribers per 100 Inhabitants in Canada and Mexico 195 Table V-3.8 Growth of Wireless Subscribers per 100 Inhabitants in Canada and Mexico 195 Table V-3.9 U.S. Telecommunications Equipment Trade in Canada and Mexico 196 Table V-3.10 Wireless Subscribers in Mexico, March 2003 196 Table V-3.11 Share of Service Revenues in Canada 197 Table V-3.12 High-Speed Subscribers in Canada 197 Table V-3.13 Canada and Mexico Telecommunications Spending 198 Table V-3.14 Growth of Canada and Mexico Telecommunications Spending 198 Table V-4.1 Landlines in Western Europe 200 Table V-4.2 Growth in Landlines in Western Europe 201 Table V-4.3 Landlines per 100 Inhabitants in Western Europe 202 Table V-4.4 Growth of Landlines per 100 Inhabitants in Western Europe 202 Table V-4.5 Wireless Subscribers in Western Europe 203 Table V-4.6 Growth of Wireless Subscribers in Western Europe 203 Table V-4.7 Wireless Subscribers per 100 Inhabitants in Western Europe 204 Table V-4.8 Growth of Wireless Subscribers per 100 Inhabitants in Western Europe 204 Table V-4.9 EU 3G Licensing Summary 205 Table V-4.10 Western Europe 3G License Cost by Major Operator 205 Table V-4.11 High-Speed Internet Subscribers in Western Europe 205 Table V-4.12 Western Europe Telecommunications Spending 208 Table V-4.13 Growth of Western Europe Telecommunications Spending 208 Table V-5.1 Landlines in Eastern Europe 210 Table V-5.2 Growth of Landlines in Eastern Europe 211 Table V-5.3 Landlines per 100 Inhabitants in Eastern Europe 212 Table V-5.4 Growth of Landlines per 100 Inhabitants in Eastern Europe 213 Table V-5.5 Wireless Subscribers in Eastern Europe 214 Table V-5.6 Growth of Wireless Subscribers in Eastern Europe 215 Table V-5.7 Wireless Subscribers per 100 Inhabitants in Eastern Europe 216 Table V-5.8 Growth of Wireless Subscribers per 100 Inhabitants in Eastern Europe 217 Table V-5.9 Eastern Europe Telecommunications Spending 218 Table V-5.10 Growth of Eastern Europe Telecommunications Spending 218 Table V-6.1 Landlines in Latin America 220 Table V-6.2 Growth of Landlines in Latin America 221 Table V-6.3 Landlines per 100 Inhabitants in Latin America 222 Table V-6.4 Growth of Landlines per 100 Inhabitants in Latin America 222 Table V-6.5 Wireless Subscribers in Latin America 223 Table V-6.6 Growth of Wireless Subscribers in Latin America 223 Table V-6.7 Wireless Subscribers per 100 Inhabitants in Latin America 224 Table V-6.8 Growth of Wireless Subscribers per 100 Inhabitants in Latin America 224 Table V-6.9 Internet Usage in Latin America 225 Table V-6.10 Latin America Telecommunications Spending 226 Table V-6.11 Growth of Latin America Telecommunications Spending 227 Table V-7.1 Landines in Asia/Pacific 229 Table V-7.2 Growth of Landlines in Asia/Pacific 229 Table V-7.3 Landlines per 100 Inhabitants in Asia/Pacific 230 Table V-7.4 Growth of Landlines per 100 Inhabitants in Asia/Pacific 230 Table V-7.5 Wireless Subscribers in Asia/Pacific 231 Table V-7.6 Growth of Wireless Subscribers in Asia/Pacific 231 Table V-7.7 Wireless Subscribers per 100 Inhabitants in Asia/Pacific 232 Table V-7.8 Growth of Wireless Subscribers per 100 Inhabitants in Asia/Pacific 232 Table V-7.9 Asia/Pacific Telecommunications Spending 237 Table V-7.10 Growth of Asia/Pacific Telecommunications Spending 237

Summary:

Worldwide telecommunications spending totaled $2.1 trillion in 2003, up 6.8 percent from 2002. The U.S. market accounted for $721 billion, while other regions spent a combined $1.4 trillion (see Table I-1.1, page 4, and Table I-1.2, page 5). Overall spending in the United States rose 4.7 percent, as double-digit increases in wireless services, services in support of equipment, specialized services (unified communications, video- and audioconferencing and high-speed Internet access) offset decreases in equipment spending and local and toll-service revenues. Europe was the next-largest region, at $602 billion, followed by Asia/Pacific at $527 billion. Spending on telecommunications equipment and services in all other regions rose 7.8 percent, fueled by double-digit increases in wireless transport services and professional services in support of equipment, offsetting sluggish growth in equipment spending and landline services. Latin America posted the largest percentage increase, with a 9.3 percent advance, followed by Asia/Pacific, whose spending rose by 8.7 percent (see Tables I-1.3 and I-1.4, page 6). The U.S. telecommunications industry will grow at a projected 9.2 percent compound annual rate in 2004–07, reaching $1 trillion. Telecommunications spending in other regions will total an estimated $2 trillion in 2007, growing by 10.5 percent compounded annually. Latin America and Asia/Pacific will be the fastest-growing regions, with projected compound annual increases of 13.4 percent and 12.6 percent, respectively. The overall market will expand by 10.1 percent compounded annually, reaching $3.1 trillion in 2007.

Companies Mentioned

- Action Tec- Active Voice- Alcatel- AltiGen- Amena- America Movil- America Online- Ameritech- Anatel- Arch Wireless- Arris PacketCable- Artera- AT&T- AT&T Broadband- AT&T Canada- AT&T Latin America- AT&T Wireless- Avaya- Axesstel- BCP of Brazil- Bell Atlantic- Bell Canada- Bell Laboratories- BellSouth- BellSouth Costa- BellSouth International- BellSouth Occidenta- BellSouth Orient- Biltmore Communications- Boeing- Boingo Wireles- Borders- British Telecom- BroadVOX- BT- BT Wireless- Cable & Wireless- Cable & Wireless IDC- CableLabs- Call-Net, Canada- Carphone Warehouse- Castel- Celcaribe- CenterTel - China Mobile- China Netcom- China Telecom- China Unicom- Cingular- Cingular Wireless- Cisco Systems- Citel Technologies- Colombia Movil- Comcast- Comcel- Comdial- Cometa Networks- Continental Airlines- Conversent Communications, 34- Conxus Communications- CosmoCom- Cox Cable, tiered services, 112- Database Systems- DEC, Signal Computing System Architecture, 142- Dell, cross promotions with carriers, 115- Deutsche Telekom - Dial Telecom- Dialogic- Digital Equipment Corporation- DirecTV- D-Link- DoCoMo- Driver Connect- Earthlink- Easynet- EchoStar- Energis- Ericsson- Etherlinx- Excite@Home - Extreme Networks- Foundry Networks- France Telecom- France Telecom Mobile Satellite Communications- Fusion Communications- Globalstar- GoBeam- GRIC- GT Group Telecom- GTS (Hungary- Guesttek- Hanaro (Korea- Hewlett-Packard- Hutchison- Hutchison Whampoa (Hong Kong)- IBM- Inmarsat- Integra Telecom, 34- Intel- Intelsat- Intermec, WLAN devices, 164- Intervoice- iPass, Wi-Fi aggregator, 166- Iridium- Iusacell, Mexico, 196- Japan Telecom- Joltage- J-Phone- KDDI- KPN (Netherlands- KPN Mobile- KT (Korea)- Leucadia National Corporation- Linksys- MaGlobe- Marconi- Matav (Hungary)- McDonalds- MCI- MegaFon, wireless services, Russia, 213- Metrocall- MetroPCS- Metropolis Intercom- Microcell Solutions, Canada- Microsoft- Minitel- Mitel- Mobile Satellite Ventures- MobileStar- Mobilkom Austria, - Motorola- MTR (Hong Kong- MTS- Natural Microsystems- Net2Phone- Netgear- NetNearU- NeuStar- New Edge Network- Nextel Communications- NextWave Telecom- Nokia- Nortel Networks- Northpoint Technology- Novacom (Hungary- Novell- NTT DoCoMo- NYNEX- Occel- Oftel, UK- Onse (Korea)- Optus- Oracle- Orbcomm- PanAmSat- PanTel (Hungary)- Paris Metro, France- Pegasus PCS- Philips- Phone1- Pine Creek Systems- PlaceWare- Polycom- Portugal Telecom- Portugal Telefonica- PoweredCom- Propel Software- Proxim- Proxyconn- Psytechnics- QUALCOMM- QWEST- RADVision- Raindance Communications- Reliance Infocomm- Research in Motion- Road Runner- Rockwell - Sainsbury- Salinas Group, Mexico- Samsung- Sanyo- SBC - Siemens- Sip-N-Surf- SkyTel Communications- SLC, 47- Slingshot Communications- Slovak Telecom, 212- Smartcom PCS- Sonera (Finland)- Sony Ericsson, WLAN devices, 164- Space Flight Operations (Russia- Spectel- Spectralink- Sprint- Sprint Canada, 197- Sprint PCS- Starbucks- StayOnLine- Sun- Sylantro Systems- Symbol- Talktalk- Tandberg- Telcel, Mexico- Tele 2- Tele Centro Oeste Celular Participacoes, - Telecom Colombia, 226- Telecom Italia, - Telecom Italia Mobile- Telecom Italia Movil, - Telecominivest- Teledesic- Telefonica (Spain)- Telefonica Moviles (Spain)- Telefonica Moviles Mexico, 196- Telenor- Telesp Celular Participacoes- Telewest, 205- Telia (Sweden)- Teligent, mobile data services, 180- Telstra, Australian privatization, 235- Telus Corporation- Telverse- Tesco- Texas Instruments- Thrunet (Korea- Time Warner- Time Warner Cable- T-Mobile International- TraxComm (Hong Kong), fixed-line services, 236- TSI Connections- TSR Wireless- U.S. Robotics- US LEC- Verizon- Verizon Wireless- ViewCentral- Vimani Wireless- Vimplecom- Virgin- Vivendi (Hungary)- Vodafone Group- Vonage- VTR GlobalCom- Wanadoo- Wave Three Software- Wayport- WebEx- WebLink Wireless- Winstar- Wire One Technologies- Yahoo Messenger