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Report: ILECs Must Upgrade Their Networks if They Are to Survive

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March 10, 2006

Report: ILECs Must Upgrade Their Networks if They Are to Survive

By Patrick Barnard, TMCnet Associate Editor

Forecasting and market research company Technology Futures Inc. (TFI) has released a report which predicts that by 2010, ILEC narrowband access lines in the U.S. will have fallen to 71 million - down from a peak of 187 million in 2000.

The report, entitled “Transforming the Local Exchange: Third Edition,” shows that as consumer demand for next generation services such as VoIP and IPTV increase, ILECs will have no choice but to invest in new technology and upgrade their networks.

Written by Lawrence K. Vanston, Ph.D., president of TFI, and Ray L. Hodges, senior consultant for TFI, the report offers the latest forecasts for the North American local exchange network, covering switching, circuit equipment and outside plant.

“Wireless, cable telephony and VoIP continue to erode the traditional voice market and destroy the value of traditional ILEC assets such as copper cable and circuit switches,” Dr. Vanston said in a new release announcing the report’s availability.

The report predicts that by 2010, about 75 percent of U.S. households will have broadband service, and about 12 percent of households will subscribe to very high-speed broadband (at least 24 Mb/s). The report finds that if ILECs are to survive, they must invest in high speed broadband networking equipment.

“Since we last updated the report in 2003, a major change in perception has occurred in the industry,” Dr. Vanston said. “Before, our forecasts of distribution fiber, very high-speed broadband, VoIP, IP video and HDTV video were regarded as speculative. Now, it’s a question of how fast. That’s what this report addresses.”

The research was sponsored by the Telecommunications Technology Forecasting Group (TTFG), a consortium of telephone companies comprised of AT&T (News - Alert), Bell Canada, BellSouth (News - Alert) Telecommunications, Qwest (News - Alert) and Verizon (News - Alert).

The report finds that the local exchange telecommunications industry is gradually transitioning from a narrowband network of circuit switches and copper cables to a broadband network of packet switches and fiber optics. This transition will largely be complete between 2015 and 2020, but probably not much before.

Dr. Vanston is an internationally-recognized authority in the use of technology forecasting in the telecom industry. His research reports and forecasts are used and referenced extensively worldwide. The Sept. 21, 1998 issue of “The Wall Street Journal” featured an in-depth interview entitled “Consultant’s Call: Lawrence Vanston Makes Some Pretty Bold Predictions for the Future of Telecommunications. He Has Been Right Before.” Notably, the predictions therein have likewise come true.

Hodges brings over 30 years of telecom expertise and experience to his work at TFI, including 25 years with GTE Telephone Operations. His views and the results of his research have been cited by such publications as “Telephony,” “America’s Network,” “Lightwave,” “Wired,” “Inter@ctive Week” and “Wireless Systems Design.”

For more information about TFI, visit

Patrick Barnard is Associate Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.

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