THE 2005 TELECOMMUNICATIONS INDUSTRY REVIEW

TABLE OF CONTENTS

Chapter I
EXECUTIVE SUMMARY
1.1 Telecommunications Industry Economic Conditions
1.2 Report Structure

Chapter II
BACKGROUND:
Telecommunications Industry Markets
2.1 Telecommunications Market Conditions
2.1.1 Broadband Market Trends
2.1.1.1 N. American Wireline Broadband Revenue Trends
2.1.1.2 European Broadband Revenue Trends
2.1.1.3 Asia Pacific Broadband Revenue Trends
2.1.1.4 LAC Broadband Revenue Trends
2.2 Wireless Industry Markets
2.2.1 Analysis of Worldwide 2G, 2.5G, and 3G Wireless Markets
2.2.2 US Wireless Trends
2.3 Cable Television
2.3.1 History of Cable TV
2.3.2 Cable Telephony
2.3.2.1 Small Business Cable Telephony

Chapter III
THE NEXT-GENERATION COMMUNICATIONS NETWORK:
Improvements to the Infrastructure

3.1 Overview of Network Topology
3.1.1 End-Users
3.1.2 Access Networks
3.1.3 Metro Networks
3.1.4 Core Networks
3.2 Transmission Improvements
3.3 Overview of Switching Technologies
3.3.1 Circuit Switching vs. Packet Switching
3.3.2 Switch Definitions
3.4 Telecommunications Networks
3.4.1 Evolution of the PSTN
3.4.2 Changes to the PSTN by 2006
3.4.3 Central Offices
3.5 Data Networks and Switch Growth
3.5.1 Broadband Switches
3.5.2 Data Core Networks
3.5.2.1 Changes in Data Core Networks by 2006
3.5.3 Data Metro Networks
3.5.4 Data Access Networks
3.5.5 Signaling and Support Structures for Data Networks
3.5.6 Enterprise Data Networks
3.6 The Next Generation Network
3.6.1 Gateways
3.6.2 Softswitches
3.6.2.1 Economic Motivations
3.6.2.2 Softswitch Revenue Growth
3.7 Optical Networking
3.7.1 Overview
3.7.2 Add Drop Multiplexers
3.7.2.1 ADM Market Opportunity
3.7.3 Optical Cross Connects
3.7.4 Present and Future DWDM Systems
3.7.4.1 Long-Haul Systems
3.7.4.2 Metropolitan Systems
3.7.4.3 Wavelength Service Market Trends
3.7.5 Market Analysis of SONET/SDH & DWDM Systems
3.8 Optical Components
3.8.1 Optical Transmitters
3.8.1.1 Tunable Lasers Diodes
3.8.1.2 Modulators
3.8.2 Optical Receivers
3.8.3 Market Analysis of Optical Subsystem and Components
3.9 Optical Fiber
3.9.1 Development of Fiber
3.9.1.1 Dispersion-Shifted Fiber
3.9.1.2 Non-Zero Dispersion-Shifted Fiber
3.9.2 Future Fiber Design
3.9.3 Market Analysis of Fiber Deployment

Chapter IV
THE ACCESS NETWORK:
Narrowband and Broadband

4.1 Narrowband Access Networks
4.1.1 Primary and Secondary Access Line Growth
4.1.2 Narrowband Access Line Forecast
4.2 Broadband Access Networks
4.2.1 Broadband Access Forecasts
4.3 Access Network Technology Options
4.3.1 DSL
4.3.2 Cable
4.3.3 Fiber
4.3.4 Fixed Broadband Wireless
4.3.5 WiFi

Chapter V
SUPPORTING THE INFRASTRUCTURE:
Network and Customer Support

5.1 Operations Support Systems Overview
5.2 Operations Support Applications
5.2.1 Business Operations Support
5.2.1.1 Customer Care
5.2.1.2 Service Orders
5.2.1.3 Billing Mediation
5.2.1.4 Rating
5.2.1.5 Billing
5.2.2 Network Operations Support
5.2.2.1 Engineering and Planning
5.2.2.2 Provisioning
5.2.2.3 Trouble/Repair
5.2.3 Network Management
5.2.4 OSS Market Structure: Demand Side View

Chapter VI
PRESENT AND FUTURE COMMUNICATIONS SERVICES MARKETS

6.1 Changing Patterns of Telecommunications Usage
6.1.1 US Business vs. Residential Wireline Markets
6.1.2 The Impact of Wireless on Wireline Residential Market
6.1.2.1 Wireline Residential LD Usage
6.1.2.2 Total Residential LD Usage
6.1.2.3 Residential Call Distribution and Duration
6.1.2.4 Residential Monthly Telecom Usage
6.1.2.5 Other Factors Impacting Long Distance Usage
6.1.2.6 Residential Telecommunications Spending Trends
6.2 VoIP
6.3 IP-Based Application Services
6.3.1 Conferencing Services
6.3.2 Unified Messaging
6.3.3 Instant Messaging
6.3.4 Mobility Management
6.3.5 Overall Enhanced IP Services Revenue Forecast
6.4 Streaming Media
6.4.1 Infrastructure Requirements for Streaming Media
6.4.2 Streaming Media Markets Analysis
6.5 WiFi
6.5.1 Comparing WiFi in NA and Europe
6.5.2 WiFi Market Drivers
6.5.2.1 Internet Growth
6.5.2.2 Home Computing Devices
6.5.2.3 Mobile Computing Devices
6.5.2.4 Wireless Internet Access
6.5.3 WiFi Market Segments
6.5.4 WiFi Market Forecasts

Chapter VII
Enterprise Telecommunications Markets

7.1 Private Lines
7.1.1 Evolution in the Private Line Services Market
7.1.2 Circuit Types
7.1.2.1 56 Kbit/s Circuits
7.1.2.2 64 Kbit/s Clear-Channel Circuits (DS0)
7.1.2.3 Fractional T1 Circuits
7.1.2.4 T1 Circuits (DS1)
7.1.2.5 Fractional T3 Circuits (Fractional DS3)
7.1.2.6 T3 Circuits (DS3)
7.1.2.7 Optical Carrier Circuits
7.1.3 SONET, IP and Private Lines
7.1.4 Private Line Circuit Layout
7.1.5 Redundancy & Restoration
7.1.6 Private Line Market Analysis
7.2 800 Services & Call Centers
7.2.1 The Growth of Toll-Free Calling
7.2.2 Call Centers and Toll-Free Calling
7.2.3 The Rise of the Contact Center
7.2.4 Toll Free Market Forecast
7.3 Enterprise Adoption of IP PBX and IP Centrex
7.3.1 Market Segments
7.3.2 Centrex 246
7.3.3 IP PBX
7.3.4 IP PBX and IP CENTREX Market Analysis

Appendix
GLOSSARY

TABLE OF FIGURES
Chapter II
II-1 Broadband Services Revenue Distribution, 2005-2010 (Percentage)
II-2 EMEA Broadband Wireline Revenue, 2005-2010 ($Millions)
II-3 Asia-Pacific Broadband Wireline Revenue, 2005-2010 ($Millions)
II-4 LAC Broadband Wireline Revenue, 2005-2010 ($Millions)
II-5 Impact of New Wireless Data Service Usage on Average Revenue per User
II-6 Cable Service Provider Telephone Service Delivery Model: Total
Potential for Small Businesses, 2003 and 2009 ($Millions)

Chapter III
III-1 Public Communication Network Architecture
III-2 SONET Ring Configuration
III-3 Hierarchy of Broadband Switch Functions
III-4 US Broadband Switches Compared with Increase in Throughput, 2000-2006
III-5 US Broadband Switch Revenue, 2001-2006 ($Millions)
III 6 Typical National Data Core Network
III-7 Core Network Configurations by Type of Traffic Pattern
III-8 Worldwide Gateway Revenue Forecast, 2003-2008 ($Thousands)
III-9 Softswitch Architecture Diagram
III-10 Circuit vs. Packet Switching of Internet Traffic
III-11 Switched Optical/Electrical Networks vs. All-Optical IP Meshed Networks
III-12 Total ADM Revenue, 2003 and 2008 ($Millions)
III-13 Origins of the Digital Cross Connect
III-14 Evolution of the Digital Cross Connect
III-15 Long-Haul DWDM System
III-16 Two Ways to Expand DWDM Capacity
III-17 Total SONET/SDH Terminal Market, 2000-2008 ($Billions)
III-18 Total DWDM Sales, 2000-2008 ($Billions)
III-19 ITU-T Wavelength Spacing Grid for DWDM Systems (Nanometers)
III-20 DWDM Bands Around 1550 Nanometers
III-21 Worldwide Optical Components Market, 2000-2008 ($Billions)
III-22 Four-Wave Mixing 118
III-23 Fiber Deployment Percentage of Total by Region, 2000 vs. 2008

Chapter IV
IV-1 US Access Line Annual Additions, 1985-2002 (Millions)
IV-2 US LEC Access Line Quarterly Additions, 1999-2003 (Thousands)
IV-3 US Wireline Access Annual Reductions, 2001-2008 (Thousands)
IV-4 Online Computers: Residences vs. SMEs, 2004-2008 (Thousands)
IV-5 Online Residences, Broadband vs. Narrowband, 2004-2008 (Thousands)
IV-6 HFC Architecture Providing Video and Voice Services
IV-7 Total RBOC Cash Expense Per Line In Service
IV-8 WiFi Hotspot Locations by Gloal Region, 2003-2008

Chapter V
V-1 OSS Dataflow
V-2 Business Operations Systems Dataflow
V-3 Worldwide Total OSS Sales Revenue Forecast 2005-2010 (Thousands)

Chapter VI
VI-1 US Total Wireline Revenue, 2003-2008 ($Billions)
VI-2 US Wireline Expenditures by Bus vs. Res 2003-2008 ($Billions)
VI-3 Residential Wireline LD Minutes per Month, 1997-2003
VI-4 Residential Wireless LD Minutes per Month, 1998-2003
VI-5 Total Residential LD Minutes per Month, 1998-2003
VI-6 Distribution of Residential Wireless LD in Minutes, 1998-2003
VI-7 Distribution of Residential Wireline LD in Minutes, 1997-2003
VI-8 Residential Wireline LD Call Duration, 1995 to 2003
VI-9 Residential Wireline Monthly Usage 1998-2003
VI-10 Average Monthly Residential Telecommunications Spending, 1995-2003
VI-11 LD Price per Minute, 1992-2003
VI-12 World Voice Revenues, VoP vs. Circuit, Wireline vs. Wireless, 2002-2007 ($Millions)
VI-13 US Total Streaming Media Market, 2003-2008 ($Millions)
VI-14 Years to reach 50 Million Users (Radio, TV, PCs, Internet)
VI-15 Global Internet Usage by Region, 2003-2008 (Millions of Internet Users)
VI-16 Growth of Global Mobile Computing Usage by Region, 2003-2008 (Millions
of Mobile Computing Devices)
VI-17 Global Handheld Usage by Region, 2003-2008

Chapter VII
VII-1 Capacities of 64 Kbit/s, T1, and T3 Circuits
VII-2 Typical Layout for a Full Circuit
VII-3 ISDN Switched Backup
VII-4 SONET Rings
VII-5 Fiber-to-Fiber Redundancy
VII-6 Cable-to-Cable Physical Redundancy (Diverse Cable Redundancy)
VII-7 Milestones in Toll-Free Services, 1967-2004
VII-8 Spare Toll-Free Numbers, 1993-2002 (Numbers Millions)
VII-9 Single Site Call Center Components
VII-10 Multi-Site Call Center Components
VII-11 Total Toll-Free Revenue, 1997-2009 ($Billions)
VII-12 Legacy Centrex Installed Base, 1995-2003 (Extensions Millions)
VII-13 Comparison of Total Premises vs. Centrex Installed Base 1995-2009
(Extensions Millions)
VII-14 Total Addressable Market: Premises Equipment Revenue ($Billions)

TABLE OF TABLES
Chapter I
I-1 Global Carrier Revenue by Region, 2005-2010 ($Millions)

Chapter II
II-1 Global Carrier Revenue by Region, 2005-2010 ($Millions)
II-2 2005 and 2010 Distribution of Global Carrier Revenue by Region
II-3 Service Provider Revenues ($Millions)
II-4 Worldwide Telecom Revenue by Services Category, 2005-2010 ($Millions)
II-5 Broadband Consumer Applications and Required Bandwidth
II-6 N. American Broadband Wireline By Market Segment 2005-2010 ($ Millions)
II-7 Revenue for 2G, 2.5G, and 3G by Region, 2005-2010 ($Millions)
II-8 Examples of 2.5G and 3G Services
II-9 Four MSO Voice Delivery Options
II-10 Top 30 Cable Service Providers: SME Businesses in All US Markets

Chapter III
III-1 Definitions of Digital Private Line Services
III-2 SONET Data Rates
III-3 Characteristics of Network Switching Methods
III-4 Distinctions between POTS and Data Networks
III-5 Network Locations of Broadband Switches
III-6 Gateway Functions
III-7 Softswitch Advantages/Disadvantages
III-8 Economic Benefits of Softswitch Technology
III-9 Strategies to Increase Network Service Margins
III-10 Softswitch Revenues and Estimated Growth, 2000-2007
III-11 OADM Applications
III-12 First Generation Metropolitan vs. Long-Haul DWDM Networks
III-13 Wavelength Market Segments
III-14 Typical Service Providers Offers for Native Wavelength Services
III-15 Typical Service Providers Offers for Wavelength Services Over SONET
III-16 Wavelength Services Revenue Totals, 2001-2009 ($Millions)
III-17 ITU-T Frequency and Wavelength Grid for DWDM Systems
III-18 Fiber Deployment by Region, 2000-2008 (Gigameters)

Chapter IV
IV-1 Broadband Communication Network Access Solutions
IV-2 Slowing Growth in High Speed Access Services, 1999-2003
IV-3 NA Broadband Connections, Residences vs. SMEs, 2004-2008 (Thousands)
IV-4 NA Residential Broadband Connections by Service Type, 2004-2008
(Thousands)
IV-5 NA SME Broadband Connections by Service Type, 2004-2008 (Thousands)
IV-6 The Versions and Features of xDSL
IV-7 FBW Unlicensed, Licensed Microwave, and Licensed Millimeter Spectrum

Chapter V
V-1 OSS Definitions Summary
V-2 Characteristics of Broadband Network Management
V-3 Distinct Characteristics of Packet Broadband Network Management
V-4 Worldwide OSS Sales by Region, 2005-2010 ($Millions)
V-5 Worldwide OSS Sales Distribution by Region, 2005 and 2010
V-6 Worldwide OSS Sales Revenue, Wireline vs. Wireless, 2005-2010
($Millions)
V-7 Worldwide OSS Sales Revenue by Service Type, 2005-2010 ($Millions)

Chapter VI
VI-1 US Total Wireline Revenue by Type of Provider, 2003-2008 ($Billions)
VI-2 US Business Wireline Revenue by Type of Provider, 2003-2008 ($Billions)
VI-3 NA IP Applications Services Revenues by Type, 2002-2007 ($Millions)
VI-4 US Total Streaming Media Market, 2003-2008 ($Millions)
VI-5 802.11 Standards Definitions
VI-6 Total Worldwide WiFi Revenue, 2003-2008 ($Billions)

Chapter VII
VII-1 Digital Services Hierarchy
VII-2 SONET/Optical Carrier Hierarchy
VII-3 Total Private Line Revenue 2000-2009 ($Millions)
VII-4 Call Center Toll-free Usage by Transaction Type
VII-5 Total Toll-Free Revenue, 1997-2009 ($Billions)
VII-6 Pure IP Centrex Service Provider Comparison

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