Virtual Explosion Coming

November 22, 2006
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According to the Telecommunications Industry Association, total spending on Internet access in the international markets reached $113 billion last year and is expected to grow to $139 billion by the end of this year.

That amount, though, will seem like a pittance shortly because TIA projects the spending will continue to climb by a compounded 18 percent annual growth rate over the next four years and will top $221 billion in 2009.

Those real dollar figures for the expansion of the virtual world are found in the 2006 Telecommunications Market Review and Forecast, a study that the leading trade group for the communications technology and information industries conducts each year.

But the projected increased spending on broadband equipment and access won’t only be driven by the world’s private sectors, as the report cites governments as actively supporting expansion efforts that will send record amounts of revenue to high-tech equipment manufacturers and broadband providers in the coming years.

The report also tapped South Korea as having the world’s most advanced broadband market last year, with penetration in 70 percent of its households. The Netherlands was second at 60 percent, followed by Canada at 52 percent, Denmark at 45 percent and Japan at 42 percent.

The U.S. was the sixth-ranked nation worldwide with 39 percent. Finland, Switzerland, France and Sweden rounded out the top 10 broadband markets.

But despite having South Korea and Japan occupying two of the top five markets and with China having 35 million broadband subscribers last year, the TIA report ranked the Asia/Pacific region as fourth in access last year. It trailed Canada, the U.S. and Europe — three regional markets with an overall penetration of 11.5 percent.

The report goes on to project that Canada will remain the access leader in 2009, with 75 percent of its households using broadband to reach the Internet. The U.S. will keep the second spot with 63 percent, and Europe will hold third place with 38 percent.

TIA estimated that global spending on broadband access will reach $81 billion this year, up from $57 billion last year, and climb to $156 billion in 2009. The four-year increase in access spending is a compounded 28 percent annual growth rate.

In contrast, revenue to dial-up services will grow at a slower pace, only 4.2 percent, over those years and will go from $55.7 billion last year to $65.5 billion in 2009.

As the Internet market expands across international markets and online traffic grows, the infrastructure will need to expand. TIA projects that worldwide telecom equipment revenue will increase from last year’s total of $276 billion to more than $379 billion in 2009, an annual compounded growth rate of slightly more than 8 percent.

To obtain a copy of the report, go to www.tiaonline.org or call (703) 907-7074.    

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