Customer demand promotes carrier wireline spending, says Yankee Group

In the first three quarters of 2001, 17 service providers spent a total of $64 billion, putting them on track to finish 2001 with total spending nearly equal to that of 2000. The claims by vendors and others that spending has dried up are inconsistent with the figures being reported in carrier financial documents, claims a new report from the Yankee Group (Boston).

In 2001, some CLECs went out of business and some completed construction, but the carriers that constitute the bulk of North American wireline spending did not drastically adjust their spending downward. The incumbent local and long-haul carriers, with the exception of Qwest and BellSouth, are maintaining returns on capital expenditures that are equal to or more than 25 percent of revenue.

"The sky is not falling, demand is not going unmet, and carriers continue to expand their networks," claims Nancee Ruzicka, program manager for the Yankee Group's Carrier Convergence Infrastructure research and consulting practice.

"The Yankee Group believes that the fate of some of the competitive and greenfield carriers has had a disproportionately negative effect on those that remain," she adds. "Likewise, the hard times that have befallen network equipment vendors are not entirely the fault of the carriers."

U.S. spending this year will start out slowly but pick up by mid-year, propelled by large metro RFPs and the enactment of accelerated depreciation legislation.

For more information about the report, "Capital Roll Call: 2001 U.S. Carrier Wireline Spending," visit the company's Web site at www.yankeegroup.com.