Telecom 2003: a look ahead

For most of the IT industry, the end of 2002 will be the close of year that can be called both dismal and disappointing, especially for the telcos.

In the U.S., this past year will be mainly remembered for the collapse of Clinton, Miss.-based WorldCom, an Internet backbone provider – an event that sent shock waves across the entire telecommunications industry.

But here in Canada, it was a year where politics played a hefty role in attempting to re-structure the sector at large. First came the Canadian Radio-television and Telecommunications Commission’s (CRTC) price-cap decision – which addressed the imbalances between competitive local exchange carriers (CLECs) and the incumbent local exchange carriers (ILECs) – followed by an appeal by one CLEC, AT&T Canada.

Next came the re-visit of the current 30 per cent stake of foreign investment limitation into a Canadian telco by the National Broadband Task Force. This remains an ongoing issue for Industry Canada.

Then, even more recently, came the sudden merger between GroupTelecom (GT) Inc. and 360networks.

To say the least, 2002 was anything but dull in the telco arena. And while on the surface it appears the sector continues to be battered, it still experienced growth, as one industry analyst pointed out. As the new year approaches, some industry members offered their thoughts on what the next year will bring to the telecommunications sector in Canada.

Lawrence Surtees, director of telecom research at IDC Canada in Toronto, identified a number of areas of change for the upcoming year. First off, he noted that DSL would over take high-speed cable modem nationally and wireless penetration globally will exceed fixed wire lines for the first time in 2003. “It has taken wireless slightly more than two decades to achieve the level of penetration that took the wireline sector 122 years to achieve,” Surtees said.

In fact, IDC numbers indicate wireless adoption is outpacing the Internet.

Surtees also speculated that Microcell’s Fido network would not survive the upcoming year and that Rogers AT&T Wireless might step in as a buyer.

Surtees called 2002 a difficult year for telcos and said the worst wasn’t over. Yet, despite all the under-spending by businesses, the market had revenues of over $30 billion for 2002 and experienced over a five per cent growth. For the upcoming year, IDC projects the industry to grow by another five per cent with revenues of around $35 billion. Over all, the numbers are promising.

“When we put it into perspective, the total IT industry has taken its first negative decline ever in Canada in 2002, so for the telco space on the whole to be positive, is all the more significant,” Surtees said. Despite the slim profits, he said that IDC is not expecting a spending increase by the telcos next year.

If the next year promises to be fairly profitable here at home, south of the border the feeling is less optimistic.

“We’re still not out of the woods yet. There are a number of issues facing the carriers and particularly the equipment manufacturers,” said Ron Hubert, director in the communications industry at Deloitte Consulting in Los Angeles.

Carriers are facing the unenviable task of having to bring 3G and wireless broadband to market, and Hubert wondered where the capital would come from to make the necessary infrastructure requirements needed. Internet protocol (IP) and voice over IP (VoIP) may be things that telcos begin to look at but it could be years before they really have any significant impact.

Perhaps the biggest challenge when addressing the telco market today in Canada is the many layers it now consists of. Back in the day, it meant voice services over wire lines. Today it means wireless, IP, VoIP, DSL and data services to accompany traditional services.

On the whole, Hubert predicted “continued cost cutting and positioning for upcoming growth” in the telecommunications space next year.

For at least one Canadian wireless provider – Telus Mobility – business is booming.

“We’re still in the growth phase of any technologies that are wireless. Penetration across the industry is around 30 per cent and that’s not anywhere near saturation,” said Chris Langdon, director of product marketing at Telus Mobility in Vancouver. He said the company is expecting double-digit growth to its wireless business for the upcoming year. He predicted that text messaging would also be a growth area in 2003.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Cybersecurity in 2024: Priorities and challenges for Canadian organizations 

By Derek Manky As predictions for 2024 point to the continued expansion...

Survey shows generative AI is a top priority for Canadian corporate leaders.

Leaders are devoting significant budget to generative AI for 2024 Canadian corporate...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now