Routing & Switching Equipment Industry Trends

Multi-Media Network Consolidation

The migration to a consolidated public telephone system that supports voice, data, and video is underway. Most believe that the protocol used will be the Multi-Protocol Label Switching (MLPS) system that supports IP, ATM, and other protocols. Transition will require converting all the class 5 and 4 switches, and will eventually require optic fiber to the home, necessary upgrades for phone companies to compete with cable carriers. Wireless carriers will compete using 3G networks and could have some advantages in suburban and rural areas.

Slow Capital Spending for Phone Companies

Phone companies don't forecast major increases in capital expenditures other than for acceleration of fiber-to-home networks, and are building out their DSL access networks slowly. But competition from cable companies offering phone services and high-speed Internet access could prompt larger investments in new equipment.

Continued Deregulation

The FCC has articulated a vision of four types of providers competing for local services – local phone companies, cable companies, wireless providers, and electric companies providing access to broadband over power lines (Access BPL). Recent FCC rulings have opened additional frequency for nationwide advanced wireless services and adopted rules to encourage development of Access BPL. The regulatory climate in the next few years is expected to foster more competition, encouraging new equipment purchases.

Continued Technology Innovations

New innovative telecommunications services are being created and offered by service providers and third parties. With the advent of two-way video, even more creative services are possible. In Korea, sending and receiving video mail, movies, and a full range of mobile automation services is possible. In the US, Sprint launched a video-mail service and other providers have announced similar services.