Total U.S. telecommunications transport services revenue reached $310.8 billion in 2005 and is expected to reach $324.7 billion in 2006, according to the newly released TIA’s 2006 Telecommunications Market Review and Forecast. Total spending on transport services is expected to grow at a 4.6 percent compound annual growth rate (CAGR), reaching $372.7 billion by 2009. The Market Review and Forecast is an annual study published by the Telecommunications Industry Association (TIA).
Loss of landline subscribers has hurt the local exchange market, a trend that will continue, though at moderating rates in the coming years. In the transport services market, landline revenue continued to fall in 2005, totaling $192.3 billion, its fifth consecutive year of decline, and wireless continued to grow at double-digit rates, reaching $118.6 billion. Between 2000 and 2005, the landline subscriber base fell 20.4 million. Households have shifted to broadband, canceling second lines for Internet access and for their children, who now rely on wireless. Some households have cancelled their landline subscription altogether and now use wireless exclusively. The introduction of bundled services at flat-rate prices should neutralize one of the advantages of the wireless market. The addition of television distribution combined with broadband Internet access will give current subscribers incentives to retain their landlines.
The number of wireless subscriptions passed landline subscriptions in 2005, reaching 194.5 million and 172.1 million subscribers respectively, and with approximately two-thirds of the U.S. population subscribing to a wireless service, the market still has room for expansion. TIA expects wireless penetration to rise to 88.3 percent by 2009, which would translate into 270 million subscribers. Landline subscriptions will continue to fall, but the rate of decline will moderate as new services such as VoIP and broadband video help landline carriers retain subscribers. By 2009, TIA estimates there will be 111.0 million more wireless subscribers than landline subscribers in the United States. Total spending on wireless services is expected to reach $180.4 billion in 2009, growing at an 11.1 percent CAGR.
Despite the overall market decline, cable-operator telephone revenue will grow at double-digit rates. Non-cable CLECs will record the largest declines; incumbent local exchange carriers (ILECs) will see their local revenue decrease at slower rates through 2008 and edge up in 2009. For the forecast period as a whole, TIA projects local exchange services revenue to fall at a 0.6 percent CAGR to $115.8 billion in 2009 from $118.5 billion in 2005.
Long-distance or toll service revenue has been declining since 2000, falling from $109.6 billion in 2000 to $73.8 billion in 2005, a 33 percent drop. The market was hurt by weak economic conditions, by the reduction in landline subscribers and by the migration of traffic from landline to wireless. With landline carriers now bundling local and long-distance services at a single flat-rate price, the historical long- distance model of per-minute charges will fade. This will eliminate the cost incentive for landline subscribers to make long-distance calls on their wireless devices when a landline alternative is available. The domestic long-distance landline calling volume is expected to begin to expand in 2007. For the forecast period as a whole, long-distance revenue will rise at a 0.9 percent compound annual rate, reaching $76.5 billion in 2009.
The overall landline network services market in 2005 was 15.8 percent lower than in 2000. However, the 2005 decrease of 1.4 percent was the smallest in five years. Although landline services revenue is expected to continue to decline over the next two years, decreases will moderate further, and in 2008- 09 the market will expand. By 2009, revenue will total $192.3 billion, climbing back to the level of 2005.
http://www.tiaonline.org/business/research/mrf
