U.S. Telecom Growth Is Strong In 08, And Won't Be Affected By A Poor Economy: Report

Growth in the U.S. telecom industry will accelerate a whole percentage point to 9.3 percent in 2008 over last year and is unlikely to be significantly impacted by a broader economic downturn, the Telecommunications Industry Association said today. In particular, growth will be driven by wireless data services, such as Web surfing—by 2011, about 35 percent of U.S. wireless service revenue will come from data, up from 16 percent in 2007.

However, a Reuters report said this year's growth is being driven by network upgrades and spending on the 700 MHz auction, and when you look out at a three-year horizon, the U.S. telecom industry will grow at a slower rate than the rest of the global industry as the wireless and wired markets mature here. The TIA said the U.S. will grow at an average annual rate of 7.2 percent between 2008 and 2011, reaching $1.3 trillion in 2011. That compares with an average rate of 10 percent, or $3.6 trillion, for the rest of the world.

The authors of the study said they did not assume a severe economic impact on the telecom sector in their forecasts. If there's a downturn, enterprise customers could cut spending, but "In contrast with 2000 and 2001, telecom is not at the heart of the downturn," said Arthur Gruen of Wilkofsky Gruen Associates, which conducted the study.

The study expects the strongest growth in the Asia-Pacific region, followed by the Middle East, Africa and Latin America. European growth will be just ahead of the U.S. at 7.5 percent annually, while Canada is expected to be the slowest with 5.4 percent annual growth.