According to a recent research report by Telecommunications Industry Association (TIA), the global telecommunications Industry spending rose 5% in 2013 to $5.1 trillion. The growth rate was far below the 7% increase in 2012. TIA cited a significant decrease in wireline spending and a slower growth in the wireless spending are the primary reasons behind the deterioration in the overall telecom spending rate.
However, the most important finding of this report is that the U.S. telecom industry spending rate had surpassed the global spending rate in 2013. This reverses a long-term telecom spending pattern that prevailed throughout the world.
In 2013, the U.S. telecom spending growth rate stood at 6.6%, slightly above 6.3% in 2012. On the other hand, the global telecom spending growth rate in 2013 was a mere 4.5%, significantly below 7.2% 2012.
TIA has estimated the U.S. wireless operators will spend $36.3 billion on network infrastructure and equipment in 2014, signifying an improvement of 8% year over year. However, the U.S. wireless industry spending growth rate was 11.7% in 2013 and 18.9% in 2012.
AT&T Inc. (T) and Verizon Communications Inc. (VZ) have completed a major portion of their 4G LTE network upgrade, while Sprint Corp. (S) and T-Mobile US Inc. (TMUS) are following suit. TIA has also estimated that in 2015, the U.S. wireless industry spending growth rate will further decline to 7.4% reaching $39 billion.
Currently, the U.S. telecom Industry is evolving around 5 broad factors. These include wireless gradually becoming the future of the telecom industry and the consequent popularity of spectrum. High-speed fiber-based network is projected to expand more aggressively, especially for video/TV offerings.
In addition, consolidation within the industry will continue mainly due to shortage of airwaves and attainment of economies of scale. Innovative product launches are expected in areas of m-Commerce, virtualization and cloud-based technology, high-speed metro Ethernet, to name a few.
Apart from these, there still remains ample scope for expansion in the U.S. According to the Federal Communications Commission, nearly a fifth of rural American households lack broadband access. During the 2014-2017 period, the overall U.S. telecom infrastructure (both wireless and landline) spending is likely to reach approximately $323 billion.
While the telecom growth momentum is expected to be maintained in the U.S. over the near term, the major impetus is likely to come from the emerging markets of China, India, Brazil and Russia. Carrier expenditures have increased in Japan and even major telecom operators in Western Europe, the most economically vulnerable region, have raised their budgets.
According to TIA data, in 2013, the Asia-Pacific region constituted 32.6% of the global telecom industry spending while Europe accounted for a 23.8% share. The U.S. generated 24.4% of the global telecom spending while Latin America, Middle East/Africa and Canada accounted for 10.1%, 7.7% and 1.4% respectively.
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