Broadband lifting all boats, CapEx

YouTube, iTunes, MySpace…. whatever the consumer web service might be – are all beneficiaries of the easy availability of always-on, broadband connections. At the end of 2006, globally there were 281 million broadband subscribers, and that number is likely to grow higher.

This broadband boomlet has pulled the telecom industry out of its slump, and now we are beginning to see signs that even hardware makers – some, not all – are beginning to show gains. North American service providers – phone companies and cable operators – had capital expenditure of $68.6 billion in 2006 up 8%, according to Infonetics Research, a Campbell, Calif.-based research group. The entire ecosystem – from optical component makers to router vendors to cellular gear makers have seen an increase in their revenues.

Infonetics’ analyst Stéphane Téral believes that this investment cycle is going to continue because everyone-is-in-everyone-else’s business. Cable companies selling phone service, and phone companies selling television service. This mash-up of media, Internet, telecom and traditional IT is going to keep the spending going at least through 2010 when it is likely to hit $76.7 billion.

The big spenders are AT&T, Sprint-Nextel and Verizon – accounting for nearly 61% of the total spending. It is still not clear if all this spending is going to pay off. From 2006-to-2010, the North American capital expenditures will be $369.6 billion.

Update: Broadband Reports points to another report that says telecoms are not spending as much, and 2007 will see a nominal increase, to about $41 billion, mostly because of increase in the IPTV-related spending. The data doesn’t include cable companies and is  phone-company related spending only.

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