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Time to worry?

January 17, 2008

Posted by Stephen Hardy

If a presentation given this morning at the Fiber Optic Expo in Tokyo is any indication, the financial community is already getting nervous about this year's prospects for the carrier market -- and by extension, capex levels and funding for FTTH initiatives, particularly in developed countries such as the U.S. and Japan.

Atsushi Yamaguchi, managing director, UBS Investment Research and senior analyst within the Equity Research Department at UBS Securities Japan Ltd., pointed to a general weakening in the U.S. economy and indications from Cisco that enterprise sales have slowed to suggest that carrier revenues will show decline this year. Such a decline will lead to investor pressure to reduce spending on costly projects -- such as FTTH. In general, Yamaguchi foresees restrictions on fixed-line capex growth among the U.S. RBOCs this year.

Meanwhile, in Japan, Yamaguchi pointed to the fact that NTT has lowered its goal for FTTH subscribers and a slowdon in revenues as indicators of a similar scenario when it comes to NTT's fixed-line spending.

Yamaguchi's thesis was that growth will be found in emerging markets, such as China, rather than in established markets. Yamaguchi said upcoming quarterly revenue figures from Verizon and AT&T; will provide early signs of how much of a revenue decline is in the offing in the U.S.


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The Lightwave editorial staff uses The Lightwave Blog to share their thoughts on optical communications and whatever else might be the current topic of conversation from cubicle to cubicle. Feel free to add your own opinions.

Stephen Hardy is editorial director and associate publisher of Lightwave, which makes him responsible for the editorial aspects of the Lightwave franchise. A technology journalist since 1982, he once had his job duties described as "gets paid to tick off advertisers ".

Meghan Fuller is senior editor of Lightwave. She has degrees from Franklin & Marshall College in Lancaster, PA, and the University of Delaware and is a card-carrying member of Red Sox Nation.