SONET:  Double Digit Growth, Double Digit Price Drop

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BOONTON, NJ. February 26, 1998:

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Investment in SONET and new-generation transmission equipment will alleviate serious limitations in today's telecom networks, allowing SONET to enjoy healthy double-digit growth over the next five years, says a new market research report from Insight Research. SONET's promises of greater network reliability and reduction of network operating costs are forcing phone companies into a high stakes race to get new generation SONET equipment installed before full competition comes. Only companies with the new SONET equipment will be able to weather the coming competitive price war, reports Insight.

According to Insight's SONET Transmission Systems: Telecom Backbone Networking, SONET/SDH represents the next evolutionary step in telecommunications transmission technology. Companies that have it will be able to compete more successfully in the face of deregulation in the loop, local, and long-distance markets. Using its comprehensive network management capability, the new SONET networks can be managed more cost-effectively and reliably given the inherently faster traffic provisioning, configuration, and restoration capability of the underlying fiber optic equipment.

"Around the globe, carriers are beginning to develop the resources to provide residential and business customers with one-stop shopping for voice, multimedia, and data services," says Robert Rosenberg, president of Insight. "The underlying transmission systems for these broadband network is SONET here in North America and the sister-standard SDH in Europe. If your company can't provide broadband networking and manage it very cost-effectively in the face of stiff price competition using SONET gear, your company will be history in five to seven years."

According to Insight, the global market for SONET will grow at 17.4% compounded annually over the next five years, from $2.8 billion in 1997 to about $6.3 billion by 2002. At the same time, INSIGHT forecasts an annual price drop of 12 to 16 percent for SONET equipment through the year 2002. Globally, the combined SONET and SDH equipment sales will grow from $4.8 billion in 1997 to about $15.2 billion by 2002. The countries with the strongest growth will be the US, China, Germany, India, Mexico, the UK, and Canada.

Further forecasts are published in SONET Transmission Systems: Telecom Backbone Networking, a 188-page market research report.

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Donna Savino

at Insight Research

973-541-9600