MARKET RESEARCH.

Fiber Optics Spending Triples In Decade, Reaches $14.6 Billion In 1999

Spending in the fiber optics market has more than tripled from $4.1 billion in 1990 to $14.6 billion in 1999, reports the 2000 MultiMedia Telecommunications Market Review and Forecast, a joint publication produced by the Telecommunications Industry Association (TIA) and the MultiMedia Telecommunications Association (MMTA).

According to MMTA President Mary Bradshaw, "The phenomenal increase in fiber optics spending reflects the growing demand for access to broadband service. We'll see the fiber market continue to grow to accommodate the increasing reliance worldwide on the Internet as a business and communications tool."

Other major findings in the Market Review and Forecast regarding the fiber optic market include:

Interexchange carriers (IXCs) increased their fiber deployment by 85.5 percent to 4.5 million miles in 1999, which is 15 times the installation level achieved in 1995. The significant increase is the result of the huge demand for Internet access combined with the entry of IXCs into local service markets, as well as the emergence of a number of new carriers that are developing high- capacity networks.

Cable companies' installation of fiber grew 12.3 percent in 1999 compared to 10.3 percent in 1998. Cable companies account for the installation of 2.6 million fiber miles in 1999, approximately 22 percent of total installation.

The biggest increase in the deployment of fiber by the local exchange carries (LECs) is projected to be in the residential access area, with an increase from 322,000 miles in 1999 to 2.2 million miles in 2003, exhibiting a compound annual growth rate of more than 61 percent.

Competitive access providers (CAPs) increased their fiber deployment by 1.2 million fiber miles in 1998 to a total of three million fiber miles, which represents a 66 percent increase over 1997. Fiber deployment levels of the CAPs are much lower than those of the LECs, but are growing at a much faster rate, associated with overall growth in the competitive local market.

Spending on fiber optics equipment is projected to rise from $12.2 billion in 1999 to $28 billion in 2003, a compound annual growth rate of 23.1 percent. Please note that information regarding the TIA or theMMTA is available via the World Wide Web at http://www.tiaonline.org and http://www.mmta.org, respectively.

Dataquest Reports Large Increase in Number of Consumers Watching TV & Surfing the Web

While the computer industry tries to position the personal computer as an entertainment center, a new survey by Dataquest Inc., a unit of Gartner Group Inc shows few US households are watching television on a PC. The Dataquest survey found 2.1 million US adults are using their PC to watch TV. The number of US adult consumers watching TV and simultaneously surfing the Web (referred to as "telewebbers") on the PC increased from eight million adults in 1998 to 27 million adults in 1999.

"The number of telewebbers is increasing. However, they are not watching TV on the PC, but rather having the TV on as background noise while surfing the Web at the same time," says Sujata Ramnarayan, senior industry analyst for Dataquest's e-Digital Media Worldwide program. "The fact that the number of telewebbers is increasing attests to the potential for including TV-like functionality in the PC and Internet functionality through television and interactivity in TV programs."

Some findings from the survey showed approximately 82 percent of telewebbers have the TV on as background noise at least once a week. Telewebbers said using the Internet while watching the news to get more information about a story their most common use, followed by getting sports information while watching a game. Other telewebbers said they use the Internet for TV listings, while others use chat rooms to talk about what they're watching. Some said they vote in viewer polls while watching a live TV show and get general information on a product they see on TV, with a few placing an order. Overall, nearly 40 percent of telewebbers are interacting with the TV show's related Web site at least once a week.

Broadband Remote Access Increases Security Risks

As more employees log on to their enterprise's networks via broadband remote access, companies are vulnerable to increased security risks, according to GartnerGroup analysts who estimate that by 2004, nearly nine million US households will subscribe to cable data services and nearly seven million will subscribe to xDSL services. With approximately 16 million US households using these broadband technologies, GartnerGroup analysts said it's crucial that businesses understand the threat broadband access can have on their security systems.

Both xDSL and cable modem service use long-term IP addresses for subscribers, creating essentially a static IP address. Users can remain connected for an indefinite time. While an always-on service is convenient for users, a static IP address is a hacker's dream.

With xDSL service, there is a direct connection to the telco over copper wire, and a separate Internet service provider (ISP) contract is required for Internet access. For cable modem service, the cable company acts as the ISP and the cable modem provides a direct, always-on connection to the Internet. Most cable service providers implement "customer protection features" in the cable modem to block dangerous services, but the features available in the current generation of modems are insufficient to protect against even simple attacks.

Using either an xDSL service or a cable service provider, the remote PC is directly connected to the Internet and is vulnerable to direct attack. The remote PC loses any central policy enforcement that may be implemented at the firewall, such as virus/applet checking or URL blocking.

"Broadband technologies should not be used for remote access without employing strong encryption and authentication as implemented in virtual private networks (VPNs), and remote PCs should undergo periodic configuration audits and security scans to ensure that dangerous services have not been activated which an attacker could use to invade over the VPN connection," says John Pescatore, research director for GartnerGroup's network security services.

Dataquest Says OEM Semiconductor Consumption Led by Computer & Communication Companies

The top consumers of semiconductors are computer manufacturers, but communication companies increased their purchases of semiconductor products in 1999, according to Dataquest Inc. The top four original equipment manufacturers (OEMs) purchasing semiconductors in 1999 were computer companies. Positions five through nine of the top semiconductor purchasers were communication companies.

Dataquest researched 45 Americas-based OEMs, 22 European-based OEMs, as well as nine contract manufacturers. The spending patterns for these manufacturers were broken out by application segment, semiconductor device type and geographic region.

"The worldwide personal computer industry continues to post double-digit growth, and the semiconductor companies are reaping the benefits, as the top four purchasers of semiconductors spent more than $25.8 billion in 1999," says Benjamin Thompson, industry analyst for Dataquest's Semiconductor Application Markets Worldwide program. "Wireless technology is driving strong semiconductor sales in the communications market."

Compaq was the No. 1 OEM as it spent $8.5 billion on semiconductors in 1999. IBM was the No. 2 OEM with semiconductor purchases of more than $5.9 billion. Driven by its strong growth in the PC market, Dell's semiconductor spending increased to nearly $5.9 billion in 1999. In 1998, Dell spent slightly more than $4 billion. Hewlett-Packard was the No. 4 OEM with $5.5 billion.

Communications manufacturer, Siemens was the No. 5 vendor with semiconductor purchases of $4.9 billion, followed by Motorola with spending surpassing $3.2 billion. Ericsson was the No. 7 vendor with semiconductor purchases reaching $2.4 billion, and Nokia was No. 8 with consumption of nearly $2.3 billion. Lucent was the No. 9 manufacturer at $2.2 billion, and Intel was the No. 10 OEM with semiconductor consumption of nearly $2.2 billion.