2004-2005 - USA - Infrastructure, Voice, Data and Mobile

Report Description

Included in this report is Paul’s analysis of the research covering - an extensive range of market and industry information, regulatory environment and statistical data. An in depth review of the following sectors -

Fixed Voice and Data;
Mobile Communications;
Infrastructure;
Major teleco’s in USA.

Category
Telecoms & Computing Annual Research

Executive Summary

The US telecommunications market has finally emerging from its slump – although at this stage, BuddeCom believes it will not be until 2005/6 before the market returns to usual levels – and when it does, it will be valued in a similar manner to any other mature national market – not at the ridiculous levels witnessed in the telecommunications and dot.com boom.

2004 was a year where many operators “turned the corner” and started to focus on increasing their customer base, while keeping one eye firmly on their profitability. The previous few years has seen most operators consolidate their position in the market and focus on steadying their profit and loss statements – but now we are seeing more operators looking to more actively poach customers and grow their own customer base – either through competition or acquisition.

In 2004 some of the predicted market consolidation in the wireless communications market finally occurred. This consolidation will continue as long as a number of strong operators remain in the market – however, the presence of congested networks and radio spectrum, particularly in the larger cities, is helping provide enough customers to support the current number of operators. Without the need to build out expensive new networks that the European operators are facing, the US operators can spend their money more sensibly on acquiring customers and attempting to increase Average Revenue Per User (ARPU) using the existing network and services. At this stage the operators have upgraded their networks to General Packet Radio Service (GPRS) or CDMA2000 1xRTT, and are now rolling out EV-DO and EDGE or WCDMA services across the country.

Competition is hotting up in the local voice market as a number of cable companies and other CLECs are beginning to emerge as major competitors to the big telecom operators – although Comcast Corporation’s focus on profitable voice services has seen it slow down the rollout of its cable telephony services. VoIP services are driving demand for data services in corporate America as these services finally become accepted by businesses. IP telephony services in the USA are increasingly becoming more common and now have the support of a number of major mainstream US operators including AT&T.

Internet and online markets are still witnessing strong growth as demand for services continues. The Internet user population passed the 207 million mark at the end of May 2004 and now mirrors the general population in terms of user demographics.

The promised fast and furious growth or broadband services never materialised – what we have witnessed instead is the organic growth of a market – but it is now beginning to reach the penetration rates that were initially forecast. DSL and cable modem Internet services continue to dominate the broadband access market, as fixed wireless and satellite services are relegated to niche markets where fixed-line solutions are not available. The much hyped and long awaited debut of Internet over powerlines is yet to materialise.

Key highlights:

The predicted consolidation of the wireless market began as AT&T Wireless was acquired by Cingular after a brief bidding war with Europe’s Vodafone. The consolidation is likely to continue;

SMS and other mobile messaging services began to make an impact on mobile operators bottom lines, with usage of these services amongst the youth segment beginning to mirror usage levels seen in Europe;

IP telephony services received a vital regulatory boost along with the thumbs up from the major operators as a number of incumbents launched mainstream IP telephony services. By 2006 IP telephony will be one of the major factors driving the growth in broadband services;
infrastructure spend finally seemed to pick up again as the financial markets began to look more fondly on telecoms players;

competition remained fierce in the long distance and international calling markets;
broadband services continue to make inroads in the Internet access market – and competition continues to drive down prices – although more slowly than in previous years;
cable telephony adoption rates slowed as Comcast in particular focussed on profitability as opposed to customer acquisition;

many of the cable operators saw their subscriber numbers stagnate as the satellite providers witnessed much of the growth in subscriber numbers in 2004;

Wi-Fi services continued to disappoint despite the roll-out of a number of new networks and the increasing penetration of Wi-Fi enabled devices – prices dropped and business plans failed as the elusive “road warrior” continued to prefer coffee to e-mail while at Starbucks et al;
the number of fixed lines in service continued to decline as wireless services and broadband on existing cable and copper decreased the need for second and sometimes first lines;

the Triennial Review of 2003 was overturned in the Supreme Court, sending the FCC into a tailspin;

the effects of the acquisition of DirecTV by News Corporation began to impact the market – although at this stage little has changed.

Table of Contents

1. TELECOMS AND MOBILE OVERVIEW AND ANALYSIS 2004
1.1 Key highlights general market – 2004
1.2 Telecom market
1.2.1 Overview
1.2.2 Regulatory environment
1.2.3 Infrastructure
1.2.4 Data market
1.2.5 Mobile communications

2. KEY STATISTICS AND TELECOMMUNICATIONS MARKET
2.1 Key statistics
2.2 Telecommunications market
2.2.1 Overview
2.2.2 FCC Triennial Review – February 2003
2.2.3 Telecom downturn in 2001-2002
2.2.4 More positive outlook in 2003 and 2004
2.3 Trends and developments
2.3.1 Change in the industry
2.3.2 Merger activity continues
2.3.3 Merger/acquisition data
2.3.4 Local competition
2.3.5 New networks and services

3. REGULATORY OVERVIEW
3.1 Analysis and predictions
3.2 The regulatory landscape
3.2.1 Key players in regulatory environment
3.2.2 The legal foundations of competition policy
3.3 Telecommunications Act 1996
3.3.1 Overview
3.3.2 Key pro-competitive provisions of the Telecom Act
3.3.3 Highlights of the Act
3.3.4 Competition policy in practice
3.4 Significant events since the 1996 Act
3.4.1 Court challenges to the Act
3.4.2 Growth of the Internet/IP telephony
3.4.3 Merger and acquisition activity and new players
3.4.4 At last competition arrived
3.4.5 FCC Triennial Unbundled Network Decision of 2003
3.5 Current state of competition
3.5.1 Local competition
3.5.2 RBOCs offering interLATA long-distance
3.6 Status of key components of the Telecoms Act
3.6.1 Access charges
3.6.2 Universal service fund
3.6.3 Unbundling network access
3.7 Foreign competition
3.8 The FCC and satellite services
3.9 Number portability
3.9.1 Toll-free numbers
3.9.2 Local number portability
3.9.3 Wireless local number portability
3.10 Cross-media ownership laws

4. MAJOR OPERATORS
4.1 USA operator market
4.1.1 Analysis and predictions
4.2 Telecom operators
4.2.1 Market overview
4.2.2 Local operators
4.2.3 Long-distance
4.2.4 Callback operators/international resellers
4.3 Major operators
4.3.1 AT&T Corporation
4.3.2 BellSouth Corporation
4.3.3 SBC Communications
4.3.4 Sprint Corporation
4.3.5 Qwest Communications
4.3.6 Verizon Communications
4.3.7 MCI (WorldCom)

5. TELECOMMUNICATIONS INFRASTRUCTURE
5.1 Analysis and predictions
5.2 Local and national infrastructure
5.2.1 Deployment of fibre optic networks
5.2.2 Switching and transmission technologies
5.2.3 Dense Wavelength Division Multiplexing (DWDM)
5.2.4 Ethernet
5.2.5 Infrastructure trends
5.3 US stakes in international infrastructure
5.3.1 Submarine cable networks
5.3.2 Satellite networks

6. FIXED NETWORK VOICE SERVICES
6.1 Local telecom services market
6.1.1 Analysis and predictions
6.1.2 Fixed networks
6.1.3 Local market
6.2 Long distance and International
6.2.1 Long-distance calling market
6.2.2 USA international calling market
6.3 Enhanced voice services
6.3.1 Payphones
6.3.2 Enhanced voice services
6.3.3 Calling cards
6.3.4 Audiotex
6.3.5 Toll-free market

7. PUBLIC DATA COMMUNICATIONS SERVICES
7.1 Analysis and predictions
7.2 Market overview
7.3 Market trends
7.4 Leased lines
7.5 X.25
7.6 Switched Multimegabit Data Services (SMDS)
7.7 Integrated Services Digital Networks (ISDN)
7.8 Frame relay
7.8.1 Asynchronous Transfer Mode (ATM)
7.9 Value-Added Networks (VANs)
7.10 Virtual Private Networks (VPNs)
7.11 Applications Service Providers (ASPs)
7.12 Multi Protocol Label Switching (MPLS)
7.12.1 Benefits of MPLS
7.12.2 MPLS in the real world

8. MOBILE MARKET
8.1 Market overview
8.1.1 Analysis and predictions
8.1.2 Record growth in 2001
8.1.3 Slow growth in 2002
8.1.4 The year of mobile data – 2003
8.1.5 The year of consolidation – 2004
8.1.6 Mobile statistics
8.1.7 PCS versus cellular service in the USA
8.1.8 Significant market trends
8.1.9 Market issues in the US mobile market
8.1.10 Mobile regulations
8.2 Mobile infrastructure
8.2.1 Analysis and predictions
8.2.2 Mobile technologies
8.2.3 Third generation mobile
8.2.4 Wireless towers
8.3 Major mobile operators
8.3.1 Analysis and predictions
8.3.2 Consolidation in the US mobile market
8.3.3 Overview of major mobile operators
8.3.4 Future trends in the US mobile market
8.4 Prepaid market
8.4.1 Analysis and predictions
8.4.2 Prepaid services
8.4.3 How prepaid works
8.4.4 Features and limitations of prepaid
8.4.5 Profile of US prepaid users
8.4.6 Benefits to carriers
8.4.7 Prepaid offerings – selected US carriers
8.5 Mobile data market
8.5.1 Analysis and predictions
8.5.2 Overview of the US wireless data market
8.5.3 Basic demand drivers
8.5.4 Evolution of standards and growth of enterprise software
8.5.5 Revenue potential
8.5.6 Wireless data classifications
8.5.7 Digital mobile and PCS
8.5.8 Mobile data services
8.5.9 Conclusion

9. GLOSSARY OF ABBREVIATIONS

Exhibit 1 – Keystones in telecommunications – 1969 - 2004
Exhibit 2 – Planned telecom offerings by major competitor
Exhibit 3 – Significant mergers and acquisitions – 1997 - 2004
Exhibit 4 – Potential acquisition targets
Exhibit 5 – Significant telecom deregulation milestones – 1969 - 2003
Exhibit 6 - Fourteen point checklist RBOCs must meet to enter InterLATA LD market
Exhibit 7 - Unbundled network elements - September 1999
Exhibit 8 – CLEC merger and acquisition activity – 2000 - 2003
Exhibit 9 – CLEC bankruptcies – 2001 - 2003
Exhibit 10 – Selected fibre optic submarine cable systems
Exhibit 11 – CLEC merger and acquisition activity – 2000 - 2003
Exhibit 12 – What is MPLS?
Exhibit 13 – US mobile protocols and primary operators
Exhibit 14 – North American GSM Association operator members
Exhibit 15 – Sales/swaps/joint ventures/restructures – 2001 - 2003
Exhibit 16 – Alltel Corporation at a glance
Exhibit 17 – AT&T Wireless Services at a glance
Exhibit 18 – Cingular Wireless at a glance
Exhibit 19 – Nextel Communications at a glance
Exhibit 20 – Sprint PCS at a glance
Exhibit 21 – T-Mobile USA at a glance
Exhibit 22 – US Cellular Corporation at a glance
Exhibit 23 – Verizon Wireless at a glance
Exhibit 24 – Major mobile operator’s SMS plans – 2002
Exhibit 25 – Mobile Internet access services – 2002

Table 1 – Capital investment in public wireless networks – 1994 - 2003
Table 2 – Prepaid subscribers in the USA – 2000 - 2005
Table 3 – Country statistics United States of America – 2003
Table 4 – Telephone network statistics – 2003
Table 5 – Mobile statistics – July 2004
Table 6 – National telecommunications authorities
Table 7 – Number of reporting CLECs and ILECs – 1999 - 2003
Table 8 – Top 10 US cable providers – 2003
Table 9 – Telecommunications revenue - services provided to end-users ($ million) – 2001 - 2002
Table 10 – Local service revenues by competitor type ($ million) – 1997 - 2002
Table 11 – Fixed telephone lines in use – 1996 - 2003
Table 12 – Access lines by competitor (million) – 1999 - 2003
Table 13 – Service providers by business type – 1997 - 2002
Table 14 – ILEC end-user switched access lines by customer type (million) – 1999 - 2003
Table 15 – Total CLEC access lines – 1996 - 2003
Table 16 – Total CLEC revenue estimates – 2001 - 2007
Table 17 – Total CLEC capital expenditure – 1997 - 2002
Table 18 – Total CLEC market capitalisations – 1996 - 2002
Table 19 – Share of total toll service (long-distance) revenues* – 2000 - 2002
Table 20 – AT&T revenue summary – 1997 - 2003
Table 21 – Revenue by segment – 2003
Table 22 – BellSouth revenue summary – 1997 - 2003
Table 23 – Revenue by segment – 2003
Table 24 – SBC revenue summary – 1996 - 2003
Table 25 – SBC revenue by segment – 2002
Table 26 – Sprint revenue summary – 1997 - 2003
Table 27 – Sprint revenue by group – 2003
Table 28 – Qwest revenue summary – 1997 - 2003
Table 29 – Verizon revenue summary – 1999 - 2003
Table 30 – Verizon revenue by segment – 2003
Table 31 – MCI revenue summary – 1995 - 2003
Table 32 – MCI revenue by segment* – 2003
Table 33 – Enterprise spending on telecoms equipment – 2000 - 2007
Table 34 – Carrier spending on telecoms equipment – 1999 - 2007
Table 35 – Fibre spending by US carriers – 2001 - 2005
Table 36 – High-speed lines (over 200Kb/s in at least one direction) – 2000 - 2003
Table 37 – Yearly OC-3 lease prices on major US routes – 2000 - 2002
Table 38 – Growth of the top US Internet routes – 1999, 2002
Table 39 – US Cable industry construction/upgrade expenditure – 1996 - 2003
Table 40 – Top 5 US cable providers and basic subscribers – June 2004
Table 41 – Status of cable networks – 1998 - 2003
Table 42 – Homes passed with fibre – 2002 - 2004
Table 43 – Top US stakeholders in submarine cable systems – 1997; 1999
Table 44 – Fibre optic submarine cable investments by region – 1997 - 2003
Table 45 – Transoceanic bandwidth capacity (Gb/s) – 2000 - 2004
Table 46 – Key local market indicators – 2000 - 2003
Table 47 – US telecom industry revenue by service – 1998 - 2003
Table 48 – Local, wireless and toll revenue growth – 1994 - 2003
Table 49 – Fixed telephone lines in service – 1996 - 2003
Table 50 – Household telephone subscribers – 1995 - 2002
Table 51 – ILEC Access line growth – 1997 - 2003
Table 52 – CLEC Access line growth – 1997 - 2003
Table 53 – Average local rates business/residential – 1995 - 2002
Table 54 – Local service revenues by competitor type – 1997 - 2002
Table 55 – Total end-user lines reported – 1999 - 2003
Table 56 – Access lines by technology type – 2003
Table 57 – Percentage of Zip Codes with CLECs – 2000 - 2003
Table 58 – Long-distance revenues – 1996 - 2003
Table 59 – Interstate long-distance revenues – 1996 - 2002
Table 60 – Interstate switched access minutes – 1992 - 2003
Table 61 – Dial equipment minutes – 1992 - 2001
Table 62 – Total toll service revenue and market share by competitors – 1996 - 2002
Table 63 – Toll services CPI and PPI – 1996 - 2003
Table 64 – Household toll calls (minutes) – 2000 - 2002
Table 65 – Average revenue per minute for interstate toll service calls – 1992 - 2002
Table 66 – Basic schedule interstate toll rates for AT&T, MCI & Sprint residential customers for a 10 minute day call (5 & 90 mile call) – 1996 - 2002
Table 67 - Basic schedule interstate toll rates for AT&T, MCI & Sprint residential customers for a 10 minute day call (200 & 2455 mile call) – 1996 - 2002
Table 68 – Interstate per minute access charges in cents per minute – 1992 – 2003
Table 69 – Total US retained international revenue (selected years) – 1982; 1987; 1992; 1997 - 2002
Table 70 – US billed international revenue (major carriers) – 2002
Table 71 – International traffic billed in the US – 2002
Table 72 – International revenue billed in the USA, selected regions – 2002
Table 73 – US international long-distance calling to Canada and Mexico – 1995 - 2002
Table 74 – Total payphone services market revenue – 1997 - 2002
Table 75 – Total payphones in service – 1997 - 2003
Table 76 – Total payphone compensation from toll carriers by type of carrier – 2002
Table 77 – Total payphone coin revenues by type of carrier – 2002
Table 78 – Total payphone provider revenue – 1997 - 2002
Table 79 – Number of payphones owned by LECs and independent operators – March 2003
Table 80 – Unified communications market subscription revenue – 2001 - 2006
Table 81 – US calling card market revenues – 1998 - 2005
Table 82 – Toll-free numbers – 1993 - 2004
Table 83 – Private/leased line service revenues – 2002 - 2007
Table 84 – T-1/E-1 circuit cost comparison – 2003
Table 85 – ISDN basic and primary rate market revenues – 2002; 2006
Table 86 – Frame relay service ports and revenues – 2001 - 2007
Table 87 – ATM service ports and revenues – 2001 - 2007
Table 88 – US carrier IP-VPN services revenue – 2000; 2003
Table 89 – ASP market revenue – 2001 - 2006
Table 90 – Mobile subscriber growth – 1994 - 2004
Table 91 – Mobile subscriber forecasts – 2003 - 2007
Table 92 – Mobile market growth – revenue, roamer revenue and employees – 1994 - 2003
Table 93 – M subscribers by network – 2000 - 2003
Table 94 – Market share of selected operators – 2002 - 2003
Table 95 – Revenue and ARPU of selected operators – 2003
Table 96 – Number of cell sites – 1994 - 2003
Table 97 – Mobile phone digital coverage by technology – 2002
Table 98 – Average local monthly bill – 1995 - 2003
Table 99 – Average local call length – 1995 - 2003
Table 100 – Digital coverage by technology – 2002
Table 101 – US mobile capital expenditure by carrier – 2003
Table 102 – Number of cell sites in the US – 1994 - 2003
Table 103 – Capital investment in public wireless networks – 1994 - 2003
Table 104 – Leading US independent tower owners – 2002
Table 105 – Market share of selected operators – 2002 - 2003
Table 106 – Acquisitions/mergers – 1998 - 2004
Table 107 – Prepaid subscribers – 2000 - 2005
Table 108 – Selected operators prepaid subscribers – 2002
Table 109 – Virgin Mobile USA subscribers – 2003 - 2004
Table 110 – Mobile Internet users – 2000; 2003; 2005
Table 111 – Wireless mobile data network subscribers (millions) – 2000 - 2005
Table 112 – Network speed – 1999; 2001; 2003
Table 113 – Annual wireless location service users and revenues – 2001 - 2005
Table 114 – Wireless telemetry service revenue – 1999 - 2004
Table 115 – WLAN end-user network equipment revenue – 1999 - 2003
Table 116 – SMS user estimates – 2002 - 2008
Table 117 – Wireless IM user estimates – 2002 - 2008
Table 118 – MMS user estimates – 2002 - 2008
Table 119 – US vs worldwide Internet and wireless Internet subscribers – 2000; 2002; 2005
Table 120 – Mobile gaming user estimates (thousands) – 2002 - 2007
Table 121 – Comparative estimates of US m-commerce revenues - 2004

Date Published ： 2004-9-2

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