Carriers plan less spending on equipment

The largest local carriers plan to spend significantly less on new equipment this year than in previous years, according to a quick check of their predictions for capital expenditure in 2002. Spending fell in 2001, and will fall further in 2002, meaning equipment makers like Lucent Technologies Inc. and Cisco Systems Inc. will be fighting for a smaller slice of the pie.

The carriers – Verizon Communications Inc., Qwest Communications Inc., BellSouth Corp. and SBC Communications Inc. – outlined their capital spending plans in fourth quarter financial reports for 2001.

Together, the four largest local carriers plan to spend between US$33.7 billion and $35.4 billion, according to their predictions. Last year the carriers spent about $43.1 billion, which means the carriers expect to spend from 18 per cent to 22 per cent less this year on network upgrades, new switches and the business infrastructure used to manage a phone company.

Qwest plans to reduce its expenditures by the largest margin – from $8.5 billion to a range between $4.2 billion and $4.4 billion. Qwest largely completed its Internet Protocol long-haul backbone last year, reducing the need for heavy spending on infrastructure in 2002. The company, however, attributed the reduction to continuing weakness in demand for communication services.

Verizon spent $17.4 billion in capital expenditures in 2001. This year it plans to spend between $15 billion and $16 billion.

SBC expects to spend between $9.2 billion and $9.7 billion in capital expenditures, compared to $11.2 billion in 2001. This partly reflects SBC’s abandonment of its Project Pronto initiative to bring fibre-optic lines closer to residences.

BellSouth plans to decrease its capital spending to a range of $5.3 billion to $5.5 billion in 2002, compared to capital expenditure of $5.9 billion in 2001.

Qwest, in Denver, Colo., can be reached at BellSouth, based in Atlanta, Ga., is at Verizon Communications, in New York, can be reached at SBC, based in San Antonio, Tex., is at