I spent an interesting day at Telecom Exchange 2012 on Wednesday June 27th at the fabled Cipriani on Wall Street. While there were also plenty of major company announcements, I’ll leave commenting on those to the many qualified industry observers and instead focus on macro connections between industry segments. The conference was a step away from my traditional satellite/wireless/media background, but it was fascinating to see how much common ground exists between them.
The satellite industry often thinks of itself as a unique small speck of the communications industry under constant threat from fiber. As it turns out, revenue from the fiber network carriers is growing, globally, at about 5% annually. Traffic is growing faster, but declining pricing limits the revenue growth – about the exact same story as the satellite operators! A quick Google search shows that Insight Research recently predicted global telecommunication industry growth revenue to increase 5.3% annually over the next five years. Even in the booming wireless carrier market IBISWorld estimates only 7.8% annual growth over the past five years. Essentially, the communications industry appears to be remarkably evenly mature across segments.
Viewing maps of fiber being laid in new markets, by companies such as China Unicom, highlighted the competition between fiber and satellite as fiber reaches more and more remote outpost. However, most companies at the conference indicated that most carrier industry growth was coming from 1) Cloud computing applications (seemed to be on every company’s agenda) with various strategies and seeming no consensus on the right one; 2) Low latency networks for high frequency trading (companies such as Hudson Fiber Network) and 3) 4G backhaul (also on everyone’s agenda), all applications having very little impact on the satellite industry. This seems to be somewhat at odds with industry research suggesting rapid carrier growth in Asia, the Pacific Rim and Latin America driven by their growing middle classes. This discrepancy may be explained by the mix of companies to whom I spoke, most of whom operated primarily in the US. But this may also be somewhat analogous to the satellite industry’s counterintuitive experience of seeing most of its growth from new applications in the United States and Europe as opposed to developing regions with less existing infrastructure.
The structure of the conference was also remarkably similar to that of the satellite industry. The rows of booths of companies selling networking hardware is really no different than any satellite conference. Of course, there were no satellite teleports exhibiting, but plenty of telecom hub operators. There were no satellite component manufactures exhibiting traveling wave tubes and the like, but there were plenty of companies selling optical repeaters and similarly analogous equipment. The leading industry news sources including Datacenter Dynamics, Globalvision Magazine, TMC.net and Telepresence Options were also there. I spoke to a representative from 451 Research and was impressed with the depth of the independent research available in this, much larger sector.