European telecoms set for growth

After months of turmoil, wireless and traditional network operators should see demand picking up this year, according to IDC

The European telecoms industry, one of the hardest hit by the ICT slump of the past few years, is now in a healthier state and will show modest growth this year, according to analyst IDC.

In a report published on Friday, the company said that the Western European market for telecommunications network services would grow by 4 percent this year. The figure is significant in the context of an extended period of turmoil for telcos, IDC said. "2003 was a stabilising year for the industry, when service providers were left to ponder their financial positions and growth strategies," said Eric Owen, vice president of IDC's European Telecommunications service, in a statement.

A significant area this year will be the growth of voice networks using Internet Protocol networks, with service providers offering more sophisticated packages and corporations increasingly interested in the technology, IDC said. Mobile providers will have a good year as well, with operators having put the worst of their financial difficulties behind them, IDC projects.

One growth area for telcos during the past year has been broadband, but at the cost of cutting entry-level prices. Industry observers predict that with competition dying down, the price-cutting will stop and telcos will focus on raising their average revenues per customer. Progress is being made in rolling out fixed wireless broadband, which could be a cost-effective way of bringing broadband to rural areas.

For mobile network operators, the surging popularity of wireless handheld computers and smartphones has paved the way for growing data revenues.