Telecom Providers Increase Capital Spending For First Time Since Dot-Com Crash

Telecommunications and data network service providers are increasing their capital expenditures for the first time since the dot-com crash of 2000, according to three surveys by Infonetics Research. The surveys found, however, that capital expenditures in North America will dip five percent, while those in Europe will increase by 11 percent, and those in Asia will increase by five percent.

The investments are weighted toward next-generation technologies including packet voice and IP/MPLS routers, the Infonetics Research's Quarterly Service Provider Capex Analysis surveys conclude. Investments are focused on forward-looking technologies because they hold out the greatest potential for revenue growth.

"At last we're seeing positive, sustainable capex environments again," said Kevin Mitchell, directing analyst for Infonetics Research and lead author of the reports, in a statement. "In all regions, the capex increases are generally going toward next generation technologies to introduce new service offerings and promote revenue growth."

The surveys also found that North America lags behind Asia Pacific and Europe when it comes to the total number of DSL subscribers. Asia Pacific had 29.2 million subscribers by the second quarter or 2004, 42 percent more than at the end of 2003; Europe had over 25 million, 40 percent more than at the end of 2003; and North America had over 13.9 million, 22 percent more than at the end of 2003. The surveys noted that the relatively small number of DSL subscribers in North America was due to the domination by the cable Internet market, although DSL is growing more quickly than cable.