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ICT Spending Saw Big Gains in 2015; Future Growth will Slow as Leading Technologies Reach Maturity

*** TIA Annual Market Review & Forecast ***

TIA Warns of Economic Disruption if Companies Face Increasingly Heavy Regulation During Time of Lower Growth Rates

ARLINGTON, VA (June 7, 2016) – The Telecommunications Industry Association (TIA) today released its 20th annual ICT Market Review & Forecast (MR&F), the industry’s most comprehensive data review, analysis and projection (2016-2020). The report, announced at TIA 2016: Network of the Future, shows that overall U.S. information and communications technology (ICT) spending grew 5.7 percent in 2015, reaching a total of $1.45 trillion, driven by strong spending in high-growth “Pacesetting” markets. While this increase is ahead of the growth seen in 2014 (5.3 percent), the MR&F predicts that all market segments will see declines in the rate of growth over the next five years.

This is the 20th year in which TIA has produced the MR&F, which looks at U.S. ICT spending based on expected performance of communications technologies, dividing them into four segments:

  • Pacesetting Markets are those experiencing double-digit growth (includes: cloud computing, business Ethernet services, network virtualization, Internet of Things, intelligent transportation and more).
  • Turnaround Markets are those in which spending is changing directions or rapidly accelerating/deaccelerating (includes: backbone infrastructure equipment, smartphones, enterprise video conferencing and more).
  • Steady State Markets are those experiencing single-digit growth with no major swings (includes: cybersecurity, robotics, health ICT, fixed broadband, data center construction and more).
  • Legacy Technologies and Services are those experiencing long-term declines (includes: circuit-switched landlines, enterprise voice systems, standard wireless handsets and more).

Overall U.S. ICT spending increased 5.7 percent in 2015, up slightly from 5.3 percent in 2014, and reached a total of $1.45 trillion. The growth was driven by increases in the first three of the segments above, with Pacesetting Markets leading the way at 19.5 percent year-over-year growth. Turnaround Markets saw 10.6 percent growth and Steady State Markets saw 5.1 percent growth. Over the next five years, U.S. ICT spending is expected to achieve a 4.8 percent compound annual growth rate, and reach a total of $1.8 trillion in 2020 – maintaining its position as one of the leading drivers of the U.S. economy.

However, the MR&F finds that only Steady State Markets experienced a 2015 growth rate that was higher than the year before (4.5 percent growth between 2013 and 2014). The report predicts that the decline in growth seen in Pacesetting Markets and Turn Around Markets will continue over the next five years. In 2020, Pacesetting Markets are expected to grow at 11 percent and Turnaround Markets at 2.3 percent. For the next several years, growth in Steady State Markets will remain higher than it was in 2014 before declining to 3.5 percent in 2020.

“The MR&F underscores that ICT spending is, and will remain, incredibly important to the American economy,” said TIA CEO Scott Belcher. “And while growth will continue almost across the board, it’s clear that the surge in ICT spending over the last decade is moving towards a more modest rate. This change is the result of maturing technologies, in which costs are lowered and companies are better able to target spending. Even as they enter a new stage, however, technologies such as cloud computing and intelligent transportation are expected to drive enormous spending.”

Belcher continued, “The changing dynamics of the ICT industry should serve as a caution flag for policymakers and regulators. U.S. companies could face more dramatic spending growth declines if Washington continues to try and impose heavy handed rules, such the FCC’s Internet regulation plan. Now more than ever, government leaders need to be forward-thinking and pursue policies that encourage private sector innovation and investment.”

Full copies of the MR&F are available for members of the media.  To request a copy, please contact Ashley Simmons at ASimmons@tiaonline.org.

Among the other key findings of the MR&F:

Cloud Spending is Pacing the Pacesetters

Spending on cloud computing ($78.8 billion, up 16.7 percent in 2015) is far ahead of spending on all other technologies within the Pacesetting Markets segment. However, other technologies in the category are experiencing faster growth rates, led by network virtualization ($1.95 billion, up 46.6 percent in 2015), M2M ($15.5 billion, up 38 percent in 2015), and business Ethernet services ($6.6 billion, up 29.4 percent in 2015).

Smartphone Penetration Leaves Little Room for Growth

Between 2010 and 2015, U.S. smartphone spending increased three-fold, from $17.6 billion to $52.9 billion. However, with smartphone penetration now at 68 percent, the MR&F predicts that spending growth will slow considerably in the coming years – from 8.3 percent annual growth in 2015, to 1.2 percent in 2020.

Data is Fueling the Steady Market Leaders

The increasingly essential role of data in modern communications is leading to increased spending on IP VPN services and cybersecurity – the two Steady Market technologies expected to see the strongest growth over the next five years.  While these technologies have reached maturity, they will still experience impressive growth rates: IP VPN services is expected to grow 8.7 percent from 2015 to 2020, driven by the expansion of cloud computing services; and, cybersecurity is expected to grow 8.5 percent during that period, driven by rising attacks as more and more data is transmitted.

The MR&F is compiled annually by TIA and used as a key resource for industry executives, government policymakers, analysts and the media. The report provides a U.S. industry overview along with chapters that offer a deep-dive into each of the market segments identified above. The 2015 MR&F provides extensive industry analysis and data, with spending forecasts through 2020.

Contact

Ashley Simmons, 703-907-7704, asimmons@tiaonline.org

About TIA

The Telecommunications Industry Association (TIA) represents manufacturers and suppliers of global communications networks through standards development, policy and advocacy, business opportunities, market intelligence, and events and networking. TIA enhances the business environment for broadband, mobile wireless, information technology, networks, cable, satellite and unified communications. Members' products and services empower communications in every industry and market, including healthcare, education, security, public safety, transportation, government, the military, the environment, and entertainment. Visit tiaonline.org for more details. TIA is accredited by the American National Standards Institute (ANSI), and is a proud sponsor of ANSI’s Standards Boost Business campaign. Visit www.standardsboostbusiness.org for details.

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