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To: Johnny Canuck who wrote (35180)	11/17/2001 4:39:49 AM
From: Johnny Canuck	Respond to of 67962

Telecom equipment industry to rebound in 2002 – study By Yukari Iwatani, Reuters 13 November 2001 The telecommunications equipment industry may have reported dismal results for the third quarter but the industry should begin turning around in the first quarter of 2002, spurred by continuing consumer demand for telecommunications services, a study said. "There is a panic on the downside just as there was an unreasonable euphoria, but as a point of fact, the downside has about reached the bottom," Herschel Shosteck, president and chairman of Shosteck Group, the Washington-based telecommunications consulting firm behind the study. According to the study, expected to be released on Tuesday, the consulting firm expects telecommunications equipment sales to recover by 4.5 percent to 11.2 percent in 2002 from 2001 levels. It expects industry sales to grow by 10 percent in 2003 compared with 2002. Shosteck Group said that the increase in both traditional landline and wireless subscribers will force network operators to resume construction of their networks despite the excess infrastructure spending of the past two years. Specifically, it said traditional telephone lines had more than doubled to 983.3 million from 407.9 million worldwide between 1985 and 2000. The rate of deployment has increased from 4.9 percent to 7.3 percent a year and is expected to continue to do so, helped by strong demand in China and India. By the same token, wireless subscribers increased by 242 million worldwide in 2000 and is expected to increase by about 246 million in 2001. Shosteck Group expects wireless subscribers to continue to increase by at least 100 million each year through at least 2006. "Firms all along the value chain have reduced their inventories to bare minimums. This is constraining the extent to which vendors of mobile equipment can expand production," Shosteck Group said. The study suggested that the telecommunications equipment firms, which secure a sufficient supply of components now, will gain a competitive advantage when demand returns. Changing competitive landscape? However, at the same time, the consulting firm warned that the dominant equipment providers may shift during the turnaround and may even provide opportunities for smaller start-up companies to enter the field. Jane Zweig, chief executive of Shosteck Group, said start up companies will likely be able to provide peripheral equipment and services that major telecommunications companies had previously planned to handle themselves. Major equipment firms no longer have the money to support marginally relevant research and development projects in light of losses and negative cash flows, she said. While the Sept. 11 attacks on the World Trade Center and the Pentagon has further pushed the economy downward, the study said the telecommunications industry should benefit in the long-term. The greater hassle of air travel and increased fear of flying will spur greater use of traditional telephones and wireless customers are expected to increase, it said. Private two-way radio should also proliferate throughout the public safety network, the study said.