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Telecom Bust Still Hurting Margins

The overcapacity resulting from the collapse of the late �90s industry bubble continues to have severe effects on US margins, according to a new analysis from Frost & Sullivan.

Prices have fallen 10 per cent annually in most vertical markets, with US consumers now paying just 3.6 percent above cost for more telecom services. Nevertheless, the US communications market is expected to grow to $422.5 billion by 2011, up from $387.4 billion last year.

�By far the largest trend in the US communications services market is the ongoing wireless replacement of wireline services. Home phone service penetration rates have peaked, and with many consumers replacing their home wirelines with wireless phone services, wireline operators could lose as many as 100 million customers by 2010,� says industry analyst Daniel Longfield.

Mobile operations in the US, still growing at 10 per cent per annum, remain a bright spot in an otherwise increasingly bleak landscape. Wireline continues to erode and the cable/satellite market is approaching saturation with a nearly 90 percent penetration rate.

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