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A final look back at ’05 prognostications

Jan 16, 20063 mins
NetworkingSecurityTelecommunications Industry

Every now and then, even we industry pundits call it right – or so it seems. Comparing my 2005 predictions with the actual outcome, here’s how the predictions fared.

Every now and then, even we industry pundits call it right – or so it seems. Comparing my 2005 predictions with the actual outcome, here’s how the predictions fared:

2005 prediction: The telecom sector rebounds.

We’re not talking about a repeat of the 1990s frenzy – think steady, incremental growth.

According to JMP Securities, a leading research and investment banking firm, the telecom sector grew an estimated 7% last year, and U.S. IT spending in general was up around 10%.

The interesting part is where the growth came from. Many bellwether public companies saw their evaluations stay flat or decline in 2005: AT&T (formed by the merger of AT&T and the former SBC) and Cisco both stayed flat.

Nortel rose slightly on the news of its new CEO but otherwise was mostly flat. Verizon and Juniper actually dropped by about 10%.

So if the growth didn’t come from the bellwethers, where did it come from? In a nutshell, alternative players, particularly those focusing on the critical areas of VoIP, security, management and managed services. Enterprises are serious about these areas, and they’re willing to spend money on alternative providers that can meet their needs. For example, 75% of the companies I work with said they were working with, or willing to consider, second-tier carriers.

Several private firms experienced a banner year in 2005, including ShoreTel Communications, Brix, Masergy Communications and Megapath. Among public alternative companies, Foundry rebounded nicely in the second half of 2005, ending the year up 27%.

Bottom line: A solid hit.

2005 prediction: Wireless broadband emerges.

Check. For just the most obvious example, Verizon and Sprint have made significant investments in EV-DO, and HP and Lenovo recently announced EV-DO-enabled laptops and notebooks. Stay tuned. This segment gets bigger still.

2005 prediction: MCI goes out of business.

OK, not really. . . . While I believe MCI will survive the year in some form or other, its long-term prospects are bleak.

As we saw, MCI became part of Verizon at the end of 2005. Admittedly, I didn’t predict the SBC-AT&T deal – but it’s worth noting the SBC-AT&T relationship has functioned more like a merger than a takeover.

2005 prediction: The FCC gets serious about regulating “Internet dial tone” (arrgh!).

Once again, a winner – the FCC’s E-911 regulations hit in late 2005, and as noted in last week’s column, they’ve finally awakened to the 21st century (not that it’s a good thing).

2005 prediction: Convergence gets bigger.

Last year, for the first time ever, enterprises I worked with reported that the primary reason for investing in VoIP was “to future-proof networks,” the first time that business driver topped “cost savings” as a goal. This year we’ll see the emergence of VoIP-based collaborative applications.

Five for five. Then again, even a stopped clock is right twice a day.