A forecasting report card

Once a year, we pundits earn our chops by reviewing the predictions we made last year and seeing how well they stood up. Here goes.

Prediction No. 1: The Bells win on unbundled network element pricing.

Actual result: Pretty much. FCC Chairman Michael Powell’s decision pleased no one – it didn’t allow for totally unbundled rates but pushed the regulatory job back on the states, supporting the Bells’ stranglehold on competition.

Predicted corollary effect: Tepid growth for the Lucents and Nortels in 2003.

Actual result: Yep. Both companies, in fact, experienced modest growth for most of the year, rising strongly toward year-end.

Prediction No. 2: There will be at least one more high-profile bankruptcy or merger in the telecom market.

Actual result: Tough call. I can claim the point on a technicality, because Cable & Wireless PLC’s U.S. operations entered bankruptcy last month, ending the U.K. provider’s dreams of becoming a true global player and marking the demise of the high-profile hosting facilities Exodus and Digital Island (both of which C&W had acquired).

But the bigger trend was the news of carriers on the mend, with both Global Crossing Ltd. and MCI (WorldCom Inc.) finally emerging from Chapter 11. I’ll award myself the point, but note that the situation has definitely improved.

Prediction No. 3: Spending will rebound slightly. . . . This trend favors Cisco and other packet technology providers.

Actual result: Solid hit. Cisco Systems Inc.’s stock started on a consistent upward trajectory in April and had more than doubled by year-end. No surprise: Carriers and corporations have told me they plan to increase their investment in packet technology.

Prediction No. 4: VoIP continues to make slow and steady gains in corporations. . . . Folks begin to reap savings because of lower moves-adds-changes costs.

Actual result: Yeah, baby! The only word I’d quibble with in hindsight is “slow.” IT executives are beginning to deploy IP telephony en masse — more than 80 percent of folks we spoke to in a recent Nemertes benchmark said they had either rolled it out or were planning to shortly — and we now have solid data demonstrating hard-dollar savings in operational cost reduction.

Prediction No. 5: Wireless continues to boom, but nobody figures out how to make money on it.

Actual result: Another solid hit. Roughly three-quarters of IT executives who participated in a recent Nemertes benchmark indicated they’d already deployed Wi-Fi, and another 18 per cent said they planned to. Only 8 per cent said they had no plans to do so. And we’re beginning to capture good, hard-dollar data on how these deployments are increasing their companies’ productivity.

Prediction No. 6: Both the Bells and the cable companies continue to miss the boat on the emerging home networking market.

Actual result: Well, yeah. But betting on telco (and cable company) cluelessness is always safe.

Stay tuned for my 2004 predictions.

Johnson is president and chief research officer at Nemertes Research Inc., a leading independent technology research firm. She can be reached at johna@nemertes.com.

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