4/5/2004 -- IT seers International Data Corp., Forrester Research and others have predicted a turn-around in enterprise IT spending – with growth in the 4.7 to 5.0 percent range – but service providers apparently didn’t get the memo.

Last month, market research powerhouse International Data Corp. (IDC) announced that the U.S. was seeing its first meaningful increase in IT spending since 2000. At about the same time, Forrester Research, citing the stronger-than-expected economic and profit growth in year-end GDP and financial reports, raised its own forecast for U.S. IT spending

In fact, the two market watchers weren’t all that far apart: IDC projects that IT spending will increase 4.7 percent by the end of 2004; Forrester, on the other hand, anticipates a 5 percent increase for the year.

According to U.K. research house Infonetics Research, capital expenditures among North American service providers were actually down 22 percent in 2003. The result, Infonetics predicts, is that capex will decline even further in 2004. “As capex was cut 22% last year, North American service providers returned to sustainable norms, spending 14.3 percent of their revenue on capex,” said Kevin Mitchell, directing analyst for Infonetics Research and lead author of the report, in a statement. “[Multiple Service Operators] will continue significant capex cutting this year, but the other segments will be plus or minus a few percentage points, resulting in a total reduction of just 2 percent between 2003 and 2004, from $48.2 billion to $47.4 billion.”

One bright spot, says Mitchell, is that the service provider market has already bottomed-out -- as far as cutting capex is concerned, anyway: “The severe aggregate capex cuts are behind us, and service providers are transitioning capital budgets to next generation technologies to introduce new service offerings and promote revenue growth.”

Infonetics found that 44 percent of service provider capex was spent on telecom and datacom equipment. The researcher broke capex down into eight separate categories: access aggregation equipment, CPE, ATM/frame relay switches, IP/MPLS routers, optical equipment, voice equipment, all other telecom and datacom network equipment, and non-telecom and data network equipment. -Stephen Swoyer