11/7/2005 -- Things are looking up, as far as high-end carriers are concerned. According to market watcher Infonetics Research, public carriers in North America, Europe and Asia-Pacific have increased their capital expenditures for two years running. But that’s just the beginning, Infonetics says: If things continue at this rate, carrier capex is almost certain to grow for a third consecutive year in 2005, by 6 percent.

To be sure, this year’s capex growth is something of a disappointment after 2004’s torrid 9 percent clip, but it’s nothing to snicker at. After all, carriers are spending again -- and at levels unseen since the boom years of the late 1990s.

This time around, the growth I carrier capex reflects investments in next-generation technologies such as packet voice, broadband, metro Ethernet and IP/MPLS routers, Infonetics says. What’s more, capex growth is general across the three regions: North America, Europe and Asia-Pacific each account for approximately one-third of total capital expenditures. "We expect similar trends to continue in 2006 as incumbent carriers keep their capex-to-revenue ratio around 15 percent and carriers in emerging markets maintain higher capital intensities," said Kevin Mitchell, principal analyst at Infonetics, in a statement.

At the same time, capital expenditures should start to drop off in the red-hot Asia-Pacific region -- after several years of runaway growth.

"Chinese and Korean carriers are expected to decrease capex in 2005," Mitchell said. "The anticipated 3 percent drop in capex in China is due mainly to the slowing down of massive buildouts. The capital intensity for Chinese carriers was over 30 percent in the last few years, which is an unsustainable ratio. Overall capex in the Asia-Pacific region is the slowest growing." -Stephen Swoyer