U.S. Telecom Providers to Purchase and Innovate More in 2010

U.S. telecom and cable operators are likely to increase their capital expenditures this year according to estimates from Avian Securities.

In a research report released last week the firm estimates that telecom service providers will increase their spending by 1.5% to $57.7 billion.

Avian estimates that the largest spenders will be AT&T Inc. (NYSE: T) ($17.5 billion), Verizon Communications Inc. (NYSE: VZ) ($16.6 billion), Comcast Corp. (Nasdaq: CMCSA, CMCSK) ($5 billion), and T-Mobile USA ($3.5 billion).

Avian's estimates may be conservative. Several weeks ago Dick Lynch, chief technology officer for Verizon said, "It's no accident that again [in 2009], Verizon's consumer and business services won major industry awards." Lynch asserted that those awards were the direct result of network spending in 2009. "The better the network, the better the performance of the applications that ride on them. It's as simple as that," he said.

Accordingly, it is likely that communications providers will spend much of their 2010 capital budgets on technologies that increase the efficiency of their high speed wireless networks. In 2010, CTO's are focused on core fiber capacity and grooming technologies. AT&T's CTO John Donovan said last week that his firm completed 7.2-Mbit/s wireless upgrades throughout its whole network including doubling the number of cell sites with fiber-optic capacities.



"We expect that the majority of our mobile data traffic will be carried on fiber-based backhaul by the end of 2010," Donovan said. AT&T will continue to enhance the "world's largest deployment of 40-Gig backbone technology," boasted Donovan.

Last week T-mobile had good news boasts of it own. The firm announced the completion of a scheduled upgrade to its entire network -- an upgrade which boosts wireless air speeds from 3.6 Mbps to 7.2 Mbps. Additionally the company promises that speeds in 2010 will peak at blazing wireless rates of 21 Mbps and that spending on a trial in Philadelphia is already underway.

The spending news came just prior to T-Mobile's announcement introducing the "Nexus One", a smartphone that will run on T-Mobile's network. The Nexus One supports these high speed wireless technologies and analysts see its pairing with T-mobile's high-speed network upgrades as a significant enabler for economic and technological innovation.