Firms Optimistic about Global Telecommunications Outlook
Despite the widespread economic turmoil, contractors and design firms in the global telecommunications market are optimistic. “Some European companies are waiting to see what will happen, assessing their capital, and may reconsider making investments in upgrades or expansions. But most are moving ahead with projects that are already under way or have already been budgeted,” says Yossi Mayraz, marketing manager in the Baran Group’s Israel office. “If companies did have to make tough decisions about where to invest because of lack of capital, it’s likely that many will choose to introduce service or expand networks in fast-growing emerging markets where subscriber penetration rates are lower, rather than increase capacity or improve coverage in saturated markets in developed countries.”
The optimism is driven by a robust global telecommunications industry services market, which is projected to grow 8% over the next five years and reach $3 trillion by the end of 2013 in spite of the financial crisis, says a report from Boonton, N.J.-based market research firm Insight Research Corp.
Voracious demand for communication services driven by massive urbanization and population shifts from rural areas to urban centers in China and the large global technology community in India continues to keep firms busy. “India, especially, has several more years of significant growth and development in its infrastructure,” says Ulrik Strottrup-Andersen, technical director for Ramboll Telecom in the firm’s Copenhagen, Denmark headquarters. “In India, mobile phone prices are the cheapest in the world and operators are now reaching out to customers below the middle class, resulting in continuously growing numbers of new subscribers.”
Beyond China and India, countries in Southeast and Central Asia, parts of Eastern Europe and remote regions around the globe continue to be a hotbed of activity as wireless carriers continue building networks to deliver basic communications capabilities. Rolling out services and expanding networks in developing countries, such as Vietnam, Cambodia and Uzbekistan, where the number of subscribers is still relatively low, continues to be a priority for operators. But the real excitement for wireless carriers is in Africa, where a combination of high growth and a sizeable addressable market are spurring a race to grab assets between communication giants including Vodafone, France Telecom and African telecommunications companies such as Vodacom, MTN and Tigo.
Earlier this year, the Ghanaian parliament approved Vodafone’s takeover of 70% of Ghana Telecom, and the wireless carrier pledged to invest $500 million to expand and improve networks in the country. With operations in 16 African countries, predominantly in French-speaking West Africa, French Telecom began acquiring assets in English-speaking Africa last year when it purchased a 51% stake in Telkom Kenya, and recently partnered with a new mobile operator owned by a group of Middle Eastern investors to bring its Orange mobile brand into Uganda. French Telecom will spend roughly $200 million on network expansions across Uganda over the next three years.
“Africa is booming but there are very few tower manufacturing facilities and it’s almost impossible to find galvanization facilities. These are the same issues we saw early on in Asian markets such as Thailand,” says Saar Bracha, CEO of the telecom division at Baran in the firm’s Cumming, Ga., office. To resolve such supply challenges firms are importing equipment from outside manufacturing facilities to serve projects in Africa.
Investments in wireline are being made once again as public and private entities begin building the so-called “last mile,” the final leg of connectivity from a service provider to consumers. The majority of wireline projects are occurring in Europe, where only eight countries boast fiber-to-the-home (FTTH) penetration rates higher than 1%, compared to countries in Asia such as South Korea and Japan, which have a 37% and 27% FTTH penetration rate, respectively.
Last summer, the French regulatory authority ARCEP and France’s national Parliament took steps to define a regulatory framework to achieve widespread deployment of fiber-to-the-home. Citywide rollouts continue in Germany, and U.K.-based H2O Networks has began work on “Fibercity,” a $45.5-million project to bring ultra-high-speed Internet access to 88,000 homes and businesses in the British seaside town of Bournemouth. Russian operator TTK intends to spend roughly $1.5 billion building fiber-to-the-home across 120 cities in the next three years.
While some service providers are moving forward with network expansions, a few, such as British Telecom, are considering delaying rollouts until the global economy improves. British Telecom planned on spending $2.3 billion to bring the next generation of super-fast broadband services to 10 million British households within the next four years, but now the company is rethinking its deployment schedule.
Data Centers
Speculation that the data center market would dry up as its biggest clients—financial institutions—became casualties in the economic turmoil may be unfounded thanks to continuing demand driven by growth in online media and social networking. Many new facilities are coming online or are in the planning phase to support retail sales, banking transactions, video streaming, music downloads, Internet searches and online conferencing. Internet companies are requiring an ever-increasing amount of computing power.
Microsoft is investing billions of dollars and adding 20,000 servers a month while Google continues to add to its global data center network, housing an estimated 1 million servers or more. AT&T recently opened an Internet data center in Singapore as part of a $1-billion investment to increase hosting capacity at 38 data centers worldwide.
Other companies are focused on consolidating their computing infrastructure in order to curb energy costs. The largest computer manufacturer worldwide, Hewlett-Packard, is now reducing its 85 data centers around the globe to a mere six facilities.
“The data center market is going bonkers right now,” says Ted Johnson, marketing and communications manager with IDC Architects, Portland, Ore. “But unlike the past, companies now want servers online in less than six months. Some require almost instantaneous capacity additions because otherwise they will be out of business.”
Expanding Markets
Consulting and design firms also see growing opportunities in information data service for segments such as urban planning, homeland security and geospatial projects, which fully integrate information-gathering and tracking technologies with communication systems. London-based Arup now provides urban information architectural services, an approach that brings together traditional disciplines of master planning and engineering, utilities design and economics with communication systems and technology to help improve a city’s environment and economy. As part of the masterplan for China’s Dongtan eco-city outside of Shanghai, Arup completed a study that proved many urban strategies depend on IT, and methods like smart metering to monitor energy use can generate information streams for capture.
“It’s about looking at information management in cities from the point of sustainability, mobility, commerce and the commercial success of the community,” says Volker Buscher, a director of Arup in London. “There is a genuine commitment by government officials to better understand the possibilities of conserving resources and running their cities more efficiently using a strategic and sophisticated IT framework.”
