This study estimates the impact of competition on narrowband local exchange switches, especially as it relates to obsolescence and depreciation lives. The study addresses access line competition from wireless, resellers, cable companies, and other full-service providers. It also addresses the displacement of voice usage by wireless and e-communications. The impact of these forces on ILEC switches is forecast for both voice and data. Finally, the forecasts are combined with previous forecasts of switch technology, including the adoption of ATM/IP switching, to provide estimated depreciation lives.
Competition from wireless and other sources may cut the number of existing ILEC narrowband access lines by 25% between now and 2005.
Wireless and e-communications -- e-mail, e-commerce, and IP-voice -- could displace enough usage over time to have a major impact on usage-based ILEC voice revenues. Between now and 2005, 50% of existing ILEC revenue-generating voice usage may be lost.
The economic value of existing ILEC assets will be very much affected by the transition from shared to dedicated lines, the adoption of high-speed data services, and the increase in data rates to above 10 Mb/s.
When competitive and technology impacts are considered, existing narrowband switching equipment has an average remaining life of between four and five years.