Online Video and Other Web Services Drive $70 billion Telecom Infrastructure Spending

As Internet users embrace Internet phone services and online video, North American telecom companies are projected to spend $70 billion on new infrastructure to meet voice and data Internet traffic demand around the globe, up 67% from their 2003 total, according to industry tracker Infonetics Research. 

Wall Street Journal has detailed article on how new web services spur phone firms to invest in increasing capacity. 

World-wide, spending on new telecom infrastructure is expected to rise to $240 billion in 2008, up 19% from 2005. 

Greater proportion of that spending is expected to be directed into accommodating Internet traffic like video. According to Infonetics Research:

  • A typical Internet video file eats up 1,000 times as much bandwidth as an average email message. 

  • Sending 100,000 emails costs a telecom company around 20 cents, transmitting 100,000 low-resolution videos costs around $15

  • Sending 100,000 high-definition movies costs around $10,800, 

Spending on older types of gear is projected to drop to $7.7 billion in 2009 from $9 billion this year, while spending on the new products is expected to rise to $16.4 billion in 2009 from $12.1 billion this year, according to Infonetics.

Related Company Highlights:

  • Covad Communications Group Inc. began a $50 million overhaul about a year ago.

  • Juniper Networks Inc. posted annual sales growth of nearly 50% last year.

  • Cisco reported a 40% increase in quarterly profits and a 27% jump in revenue.

  • Avici Systems Inc.'s revenue has nearly doubled last year.

  • Telefon AB L.M. Ericsson announced it would buy Redback for $2.1 billion

  • After a wave of consolidation in US telecom industry, and AT&T and Verizon account for 56% of the North American industry's infrastructure spending, according to Infonetics.

  • Nortel Networks. which hasn't shifted as much into making the new gear, last week announced job cuts of 2,900.

  • Alcatel-Lucent said that it would shed 12,500 jobs, or 16% of its employees, over the next three years.

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