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This report examines the capital spending by incumbent local exchange carriers (ILECs) to improve service and deploy broadband, detailing which carriers have capital funding available, where the carriers are located, the size of each carrier, how much each carrier plans to spend, what carriers are approved to purchase, and which vendors are qualified to provide these carriers with equipment and services.
Almost 90% of the nearly 1,000 ILECs receive funding from the Rural Utilities Service (RUS), which has loaned over $12 billion to ILECs over its fifty-year history. Between 2000 and 2001, eighty- nine carriers (mostly ILECs) received over $1.4 Billion in funding from the RUS. As the stated goal of the RUS is to provide funding to extend telecommunications services to the country’s most under-served areas, those carriers with the lowest annual revenue tended to receive the most funding.
With the information contained in this report, NPRG believes that the ILEC market represents an excellent sales opportunity for vendors over the next several years. ILECs continue to boost CapEx, while RBOCs have slashed spending and some CLECs have disappeared altogether. Meanwhile, many ILECs have yet to form vendor relationships, warranting a targeted sales effort toward the sector that may produce immediate returns. By accessing this previously untapped revenue source, vendors can forge new relationships with ILECs and avoid the telecom shakeout.
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