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To: Boplicity who wrote (24243)	3/15/1999 6:44:00 PM
From: Ruffian	Respond to of 152472

Spending Cuts?> From the March 15, 1999 issue of Wireless Week Spending Cut Threatens Manufacturers' Revenue By Edward Warner WASHINGTON--Has network equipment spending peaked? Two key organizations think so, lending credence to industry speculation that more belt-tightening by manufacturers may lie ahead. However, hardware suppliers--at least the large ones--said that's not so. New research done separately by the Yankee Group and the Telecommunications Industry Association predicts 10 percent annual drops in carriers' network equipment spending. The Yankee Group points to 2000 as the fall-off year, and TIA said declines averaging 10 percent annually have occurred since 1997. The Yankee Group's research, which has not been made public, sees infrastructure spending falling $1 billion in 2000 from a record $9 billion this year. Declines will continue through 2003, the final year of its survey, when spending will total $7.3 billion, it said. The research didn't account for potential sales of third-generation equipment, however. Yankee Group Senior Vice President Mark Lowenstein termed the fall off "a slight decline" arising because the industry reached the peak years of network buildouts. Now, he said, carriers are shifting from building cell sites to expanding capacity, a less costly task that can involve simply adding radio ports. By 2003, he predicts, 80 percent of carriers' infrastructure investment will focus on capacity. TIA predicts the infrastructure spending decline will continue through 2002, the furthest year of its estimates. But it sees overall wireless spending increasing over the period because carriers will redirect investment from network equipment to services. TIA sees carriers' investment in services growing from $33 million in 1997 to $54 million in 2000 and $71 million in 2002. The TIA study was conducted jointly with the Multimedia Telecommunications Association and relied on data from other sources, including market researchers Paul Kagan Associates and The Strategis Group. At Nortel Networks, in-house market researcher David Irwin and others questioned the accuracy of the pessimistic forecasts. Irwin predicted 3G will be a "significant driver" for infrastructure hardware sales, which he sees growing over coming years. The company has always beat analysts' low projections, he said. At Ericsson Inc., spokeswoman Kathy Egan said carriers' one-rate plans spurred infrastructure spending nationally by causing major carriers to build out the farther reaches of their networks.