VDC Study: SS7 Network Elements to Increase to $11.5 Billion by 2005

8/7/2002 - Recent analysis from Venture Development Corporation's (VDC) Telecommunications Group reveals that the global market for Signaling System 7 (SS7) network elements leveled off at $9.4 billion in 2001. According to VDC's recently-published market study entitled "The Global Market for Signaling Products and Related Equipment in PSTN and Voice over Packet Networks; Volume I: SS7", shipments of SS7 network elements are expected to increase by just over 4% annually to reach approximately $11.5 billion by 2005.

This already measured growth would be far less were it not for the strong projected demand for network elements that enable wireless functionality. As the exhibit below displays, HLR/VLRs, SMSCs, and MSCs, (all wireless components) are all forecast to experience double digit annual growth for the next several years, in contrast with the relatively flat growth of other traditional elements.

Currently, most carriers worldwide are expending the majority of their efforts trying to maximize the efficiency and revenue potential of their already established networks, few new capital investments are being made on network building blocks. Rather, augmentations and extensions, especially to enable wireless connectivity, are the trend. It is this performance which will compensate for the otherwise stagnant market and allow the SS7 industry as a whole to experience modest growth over the next four years.

Despite the presence of a worldwide economic slowdown that has hit the telecom sector particularly hard, the number of worldwide wireless subscribers nonetheless is steadily climbing towards one billion. Continuously lowering costs, user-friendly handsets, and the arrival of increased 3G functionalities in the near future are all trends that suggest this growth will not abate soon. In the meantime, service providers will continue to depreciate their legacy equipment and improvements in IP technology will facilitate the onset of hybrid SS7/IP networks. As technology improves and spending in the sector increases, there should be the logical replacement and deployment of hybrid networks, at which point network building block elements such as SCPs and service nodes should enjoy a resurgence. Until then, much of the health of the SS7 market will rely on the innovations and evolution of wireless communications.

Study Sources
Venture Development Corporation, a technology market research and strategy firm, was founded in 1971. Over the years, VDC has developed and fine-tuned a unique and highly successful methodology for forecasting and analyzing highly dynamic technology markets. VDC has extensive experience in providing multi-client and proprietary analysis in the SS7 market. VDC also offers in-depth market research and custom strategic planning consulting services in the areas of industrial measurement and control, factory automation, communications, electronic components, as well as retail automation, office equipment, and consumer electronics.

About the Study
"The Global Market for Signaling Products and Related Equipment in PSTN and Voice over Packet Networks; Volume I: SS7" report is a follow-up to VDC's 1999 SS7 study and is designed to provide subscribers with relevant, up-to-date market intelligence to support product planning, market development, and channel partnering decisions. While the 1999 study touched on the logistics of packet based networks, VDC has now dedicated an entire volume to the topic (Volume II), as technology and innovation over the recent past have necessitated. Volume I addresses the current SS7 network status, and segments, quantifies and forecasts its respective markets. Volume II discusses the issues and challenges surrounding the inevitable transition of telephony to a packet based architecture, provides the same in-depth analysis of the market for packet based equipment, and provides strategies for surviving and succeeding in this progressive marketplace. Together, Volumes I and II provide a comprehensive, holistic view of the pertinent issues and trends in the telecommunications industry today. The report has been well received thus far and has been lauded by clients for its accuracy and pragmatic outlook.

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