4/11/2005 -- The outlook for Cisco Systems Inc., Juniper Networks, and other vendors that depend, in whole or in part, on the deep pockets of service providers should improve this year, says market watcher Infonetics Research.

This is encouraging news, Infonetics notes, because the carrier market effectively stagnated last year, cresting at just under $58 billion—an increase of only a fraction of a percent from 2003.

This year, on the other hand, Infonetics is predicting fairly robust growth, in the neighborhood of 5 percent, actually, which should drive revenues to $61 billion.

It’s all part of a long-anticipated resurgence in capital expenditures—or “capex,” in market research-speak—on the part of service providers, says Kevin Mitchell, directing analyst for Infonetics. “We saw some meaningful changes in the North American capex environment in 2004, with aggregate spending holding steady after three years of drastic cuts, and ILECs increasing their investments,” Mitchell said, in a statement.

Elsewhere, Mitchell highlights another market force that Infonetics thinks could fuel additional carrier spending. “Another noteworthy trend is how fast mobile subscribers are closing in on access lines, with mobile subscribers now at 90 percent of PSTN lines, up from 77 percent at the close of 2003. North American mobile subscribers grew 13 percent between 4Q03 and 4Q04, from 145 million to 164.3 million. We could easily see mobile overtake access lines in 2005.”

DSL subscribers increased 44 percent between the third and fourth quarters of 2004, numbering 16.5 million. Cable Internet subscription grew, too, although not quite as rapidly as its broadband cousin. The number of cable subscribers increased by slightly more than a quarter (27 percent), although cable subscribers still outnumber DSL subscribers by almost 30 percent.

The irony, of course, is that cable companies decreased their capex between 2003 and 2004. Nevertheless, Infonetics projects that cable service providers will increase spending slightly in 2005, primarily for new voice-over-IP equipment and next-gen IP/MPLS routers. At the end of last year, broadband lines accounted for more than one-fifth (21 percent) of access lines in North America. -Stephen Swoyer