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Chevy Chase, Maryland -- Be prepared for a further downward adjustment in the telecom industry this year, but expec...

June 3, 2002  

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Chevy Chase, Maryland — Be prepared for a further downward adjustment in the telecom industry this year, but expect an upswing in early 2003. That was the general prediction of some fifty senior executives of the world’s leading telecom service providers who took part in a recent study by Telecommunications & Technologies International, Inc. (TTI).

In the company’s report — “World Network Equipment Industry Recovery 2002-2003” — the international executives discussed their capital expenditure plans for the next few years and offered personal and company perspectives on the industry.

Study results found that telecom service providers will spend less on network equipment this year than last, in line with current cost-cutting efforts. Internationally, capital expenditure budgets for 2002 are down 11.07 per cent from 2001. In North America alone, budgets are down 7.65 per cent this year from last. Some companies plan further cuts next year, but capex budgets overall will level off or even increase slightly in 2003, an increase of slightly less than two per cent over 2002.

For many companies — service providers, equipment manufacturers, suppliers and software developers alike — the difficult adjustments of the past two years are not over and an important and difficult transition period lies ahead, the study shows.

TTI says that “emerging from the executive interviews is a portrait of a far-flung industry that is resizing and redefining itself so that it better corresponds to customer requirements and the realities of the marketplace. Among the major developments revealed is the accelerating pace with which three familiar “sleeper” technologies-IP-based voice and data networks; broadband; and third-generation (3G) wireless-are being deployed, quietly revolutionizing telecommunications services and the telecom industry everywhere.”

The study also highlighted the critical role of government in the revitalization of the telecom industry. When executives were asked to assess factors that could directly affect their capital expenditure budgets over the next two years, more of them pointed to regulatory change than to any other single factor.

Despite their forecast for a difficult 2002, the executives showed a uniformly upbeat attitude. As John Barnicle, president and COO of FOCAL Communications, noted: “The companies that have worked through the problems of the past couple of years and uncertainties that still lie ahead are likely to be stronger and better prepared for the future.”

For further information on the study, or to order a copy of the report, please contact Richard Thayer at TTI by phone (301-913-2888) or email (