Industry Indicators

OSS spending will increase from $31.2 billion in 2003 to $41.9 billion in 2006, according to RHK, a telecom market research and consulting firm. The 10 percent increase follows the 4 percent overall decline from 2002 to 2003. “We expect service providers’ capital spending as a percentage of revenue to hit bottom in 2003, after which the market as a whole—and OSS spending in particular—will begin a recovery,” the RHK report authors say.

Among the report’s other findings:

• Service providers over the next year will focus on paying down debt. OSS spending won’t grow until demand improves from enterprise consumers driven by an improvement in the economy. Most 2003 budget decisions will be based on finding software and other methods to contain costs.

• OSS investments will focus on improving profitability and automating manual tasks, including network resource management, activation and performance management.

• Cutting labor costs requires automation of the operations support process. It is not clear when service providers will do this.

• Spending on commercial OSS products is expected to grow by 14 percent between this year and 2006, or twice the rate of spending on in-house solutions.