Service Providers Losing Confidence: Survey

The service provider community has felt better about its prospects. According to a report released today, a slight dip in their confidence levels may signal a reticence to aggressively invest in new technologies and marketing initiatives.

That is the conclusion of analysts at Sage Research as they reported on the results of their July 2004 service provider confidence index (SPCI)report .

The report measures and analyzes the current mood of telecommunications service providers. It signals to companies that sell products or solutions to service providers what their customers consider to be the present condition of the industry and what their expectations are for the near-term future.

According to the firm, the current conditions index shows service provider sentiment dipping into "low" territory (below 50) for the first time since January, resting at 49.8. The service provider expectations, meanwhile, sank to 65 from 77.2, lower than July 2003's level, though still in "high" territory.

"The overall mood of the July SPCI is negative, but it is difficult to predict that this will continue as a downward trend," said Research Director Chris Neal. "Most of the current conditions sub-indices remain close to prior levels, while the steep drop in the expectations index shows a sharp reversal in nearly all the sub-indices, most notably investor confidence. The September 2004 SPCI will be an important litmus test of whether this is a temporary dip or the beginning of a broader trend."Sub-Indices: Many Modest Drops, Only One Gainer

The main current conditions and expectations indices are each the average of six sub-indices. A score of 50 divides "low" territory from "high" territory. Of the twelve total sub-indices, ten fell, one rose, and one remained unchanged in July. The only gainer is employment current conditions (rising 1 point to 34), while service development current conditions remains at 75.

Falling sub-indices are led by investor confidence expectations -- which fell 20 points to 82 -- but is still comfortably in "high" territory (above 50).

Industry conditions expectations dropped 14 points to rest at 65, and current industry conditions is by far the sharpest falling current conditions sub-index, dropping 11 points to drop into "low" territory at 42.