The telecommunications market continued to consolidate throughout 2006, but that consolidation proved beneficial for the worldwide telecom industry, which grew 11.2% in 2006 to $3 trillion.

The Telecommunications Industry Associations (TIA) reported the growth in its annual Telecommunications Market Review and Forecast, which was released Thursday.

The U.S. market represents $923 billion of the 2006 worldwide market, up from $845 billion in 2005. TIA expects the U.S. market to grow to $1.2 trillion by 2010.

Growth in the U.S. is in part due to bundled offerings from incumbent providers and cable competitors. The report, which was drafted by the TIA and Wilkofsky Gruen Associates, says greater numbers of residential users adopting VoIP is another driver. Looking ahead, wireless data usage is expected to grow substantially in coming years, TIA predicts.

Meanwhile, enterprise users are expected to continue the trend of replacing legacy services such as frame relay and ATM with IP services including IP VPN offerings, the report says. TIA says more users are turning to IP VPN services, rather than handling these networks in house, because of the complexity of managing VPNs.

In 2006 businesses spent about $5 billion on VPN services, which include both CPE-based and network-based offerings. The report says that number will jump to over $6 billion by end of 2007 with growth predicted throughout 2010.

On the Internet access front, last year’s TIA report noted a significant shift in U.S. usage. For the first time, in 2005, there were more subscribers accessing the Internet using a broadband service (44.8 million) than there were accessing the Internet using dial-up (39.3 million).

That gap widened in 2006. Last year there were 34.6 million dial-up users and 56.7 million broadband users in the U.S.

Similarly, the number of wireless users -- which surpassed the number of landline phone users for the first time in 2005 -- continued to grow. In 2005 there were 175.4 million landline users and 194.5 million wireless users in the U.S. In 2006, TIA reports there were 161.2 million landline users and 216 million wireless users.

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