SIC 3661
TELEPHONE AND TELEGRAPH APPARATUS



This industry covers establishments primarily engaged in manufacturing wire telephone and telegraph equipment. Included are establishments manufacturing modems and other telephone and telegraph interface equipment. Establishments primarily engaged in manufacturing cellular radio telephones are classified in SIC 3663: Radio and Television Broadcasting and Communications Equipment.

NAICS Code(s)

334210 (Telephone Apparatus Manufacturing)

334416 (Electronic Coil, Transformer, and Other Inductor Manufacturing)

334220 (Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing)

Industry Snapshot

While the telecommunications equipment manufacturing industry was strong and growing during the late 1990s, by the early 2000s conditions had worsened. Ambitious infrastructure build-outs during the prosperous 1990s were not met with anticipated demand. For telecommunication service providers, this situation led to overcapacity and high levels of debt. By 2003 a number of providers had declared bankruptcy or were in poor financial shape. Subsequently, capital investment fell considerably, which was bad news for telecommunications equipment companies. According to The Economist , in late 2002 investment bank Morgan Stanley indicated that capital spending might decrease as much as 34 percent for the entire year. Coupled with an already weak economic climate, this trend led to downsizing and cutbacks among industry leaders. For example, Telephony reported that Lucent Technologies, Inc. had reduced its workforce by 50,000 as of August 2002 and that an additional 6,000 cuts were planned. These bleak conditions had a negative impact on industry revenues. The Telecommunications Industry Association (TIA) reported that, in 2001, the industry as a whole saw revenues fall for the first time in a decade. For the equipment sector, this drop resulted in a 2.8 percent decline, with 2001 revenues reaching $166.7 billion.

By the late 1990s the industry began changing in response to advances in technology and in the deregulation of the telecom services industry. The shift from analog transmission to digital was virtually complete and the next phase in the evolution of communication networks, the shift from separate networks for voice and data to a single network for both, was underway. This change prompted the leading companies in the industry, formerly focused on only one kind of network, to move to establish themselves as capable for the coming converged network. However, by 2003 the movement toward "convergence" had not materialized as expected. Within the corporate sector, instead of investing in new infrastructures, many firms remained content with their traditional networks, which affordably met their needs. In these years, the deregulation of the telecommunications services industry enabled service giants such as AT&T to diversify their offerings, which expanded the market for equipment. Moreover, the explosive growth of the Internet created demand for further advances in equipment.

Organization and Structure

The telephone and telegraph equipment manufacturing industry can be divided into two broad categories: service carrier network equipment manufacturers, which sell telephone switching and switchboard equipment primarily to local and long distance phone companies; and end-user or enterprise equipment manufacturers, which sell data and voice communications equipment, facsimile equipment, call/voice processing equipment, consumer communications electronics, private branch exchanges (PBX), and videoconferencing equipment to both businesses and residential users alike. By the end of the 1990s, however, significant changes were taking place in the telecommunications industry that tended to blur such distinctions. Technological changes made possible the convergence of voice communication networks and data networks. In addition, some consolidation was taking place as industry leaders acquired or established partnerships with smaller companies that had particular technological or marketing strengths. The result was that the industry leaders began manufacturing equipment for all segments of the telecommunications market. Small start-up companies, created around a particular advance in technology, were also an important part of the industry because they were the source of important innovation. Such companies were often the targets of acquisition by a larger company in the industry.

Background and Development

American Samuel F. B. Morse introduced the first commercially successful telegraph in 1844. "What hath God wrought?" was the first message to be transmitted on the 37-mile pole line between Baltimore, Maryland, and Washington, D.C. Under Morse licenses, open-wire pole lines were soon erected all over the United States and Canada.

Alexander Graham Bell patented the telephone in 1876, beating Elisha Gray by a matter of hours. The technology was immediately put to use in telephone systems by the National Bell Telephone Company (originally the Bell Telephone Company). Western Union Telegraph Company also began offering phone service, using technology developed partly by Gray and Thomas Edison. But as a result of an out-of-court settlement in a patent dispute, Western Union sold its phone operations to Bell in 1879. Bell also purchased its manufacturing arm, which became the Western Electric Company.

Bell's phone service was immediately popular. By March of 1880, there were over 30,000 U.S. telephone subscribers and 138 telephone exchanges. By 1887, just ten years after the commercial introduction of the telephone, there were over 150,000 subscribers and about 146,000 miles of wire. In addition, nearly 100,000 people had phone service in Europe and Russia.

Developments in the switching equipment were necessary to make this growth possible. The first switchboard was installed in Boston in 1877. Before, this date one telephone had to be directly connected to another in order to make a call; 1,000 connections were necessary for 50 telephones to call each other. In 1891, American Almon B. Strowger patented the first automatic switchboard. As telephone services proliferated, a demand for long-distance services arose, and Bell established the American Telephone and Telegraph Company in 1885 as its long-distance subsidiary. Important equipment and wire advances allowed commercial service to be implemented between Boston, Massachusetts, and Providence, Rhode Island, by the 1890s. Distances gradually increased with the introduction of new equipment, such as relays, loading coils, amplifiers, and repeaters. Radiotelephone service to Europe was established in 1927, but large-scale wire-line telecommunications were not available until 1956 when the first transatlantic cable was completed.

Broad patent rights enabled the National Bell Telephone Company, which became the American Bell Telephone Company in 1878, to completely dominate the telephone service and equipment industry. Bell built a nationwide network by licensing local operating companies to deliver service for five to ten years. Bell received $20 per phone each year and reserved the right to buy the local network at contract expiration. Although Bell's patent rights terminated in 1894, only a few independent companies emerged as competitors. By 1899, Bell maintained a network of 800,000 lines.

AT&T became the parent company of the Bell system in 1899 and grew steadily through the first half of the century. Demand surged during the 1950s and 1960s, with an influx of new products, services, and technological breakthroughs. Despite pressure by anti-trust regulators to cede its market dominance, AT&T continued to grow during the 1960s and 1970s, becoming the largest company in the world. In 1974, however, anti-trust suits filed separately by MCI (now MCI WorldCom) and the Justice Department signaled an end to the company's unfettered reign. Ten years later the monopoly was finally broken when AT&T was divided into eight pieces.

Prior to the 1980s, business telecommunications were more or less a straightforward matter. Services were provided by AT&T with its undisputed monopoly as the carrier of voice, data, and text communications. Large business users had private branch exchanges (PBXs), for internal and external voice traffic, telex machines for instantaneous transmission of text, and dedicated data lines for communications with mainframe computers. Small businesses used key telephone systems and facsimile machines.

Progress in microelectronics and the deregulation of the telecommunications structure in the United States changed all that. The boundaries between computing and telecommunications became blurred. With the advent of the Integrated Service Digital Network (ISDN), the telecommunications network no longer had to separate voice, text, data, and image traffic. Everything could go over the wire or fiber optic cable in bits. There could be a uniform ISDN plug for telephones, computers, and fax machines. Personal computers not only became more powerful, they also had the potential to double as telex and data communications terminals, as fax machines, and as telephones and telephone answering machines. Electronic data interchange (EDI) could eventually do away with forms completed in duplicate and triplicate. Videophones would bring the person at the other end of the line right into the office.

Changes in telecommunications regulations since the early 1980s also transformed the way telecommunications developed. Competition in network provision improved the quality of traditional services. Waiting lists for business and residential voice and data lines fell dramatically. Telecommunication and equipment prices also declined. New telecommunication-based services sprang up, bringing revenue not only to telecommunication operators and the information providers, but also generally enhancing the value of business operations. Even domestic users with touch-tone telephones were beginning to avail themselves of network-based facilities that ten years ago only users with sophisticated communications equipment could afford.

Central Office Switching Systems. When large scale integrated circuits were perfected in the 1970s, it became technically feasible to develop a digital-switching network to replace the electronic network in central offices. Modern central office technology had a digital switching network controlled by a programmable central processor. Switching systems routed calls between themselves and selected terminating stations by addressing. Station addresses in the United States consisted of a three-digit area code and a seven-digit telephone number. From overseas locations, a country code was added.

Centrex. Before the arrival of microelectronics and PBXs, large companies were reluctant to place switching systems on the premises to provide private branch exchange service. Centrex was a PBX-like service furnished by the local telephone company through equipment located in the central office. Centrex features allowed direct inward dialing (DID) to a telephone number and direct outward dialing (DOD) from a number without operator intervention. For calls into the Centrex, the service was equivalent to individual line service. Outgoing calls differed from individual line service only in the requirement that the caller dial an individual access code (usually 9). Calls between stations in the Centrex group required four or five digits instead of the seven digits required for ordinary calls. An attendant position located on the customer's premises was linked to the central office over a separate circuit. Centrex service provided PBX features without locating a switching system on the user's premises.

Customer Premise Equipment. In the early 2000s, this category included all the equipment that made up the customer's network, which might be as simple as a telephone handset or as complicated as a network of thousands of phones, computers, fax machines, and other terminal equipment as well as all the wires, cables, routers and switches that connect them.

Key Telephone Systems. Key Telephone Systems (KTS) were not high-technology products compared to radio, satellite, and fiber optics, and they did not have the technical appeal of a PBX, but they were the workhorses of American business. Like other customer premise products, KTSs evolved from wired logic and electromechanical operation to stored program or firmware control. In the process, they adopted many features that were once the exclusive province of PBX. The Electronic Key Telephone System offered most of the features of a PBX, especially the hybrid version, which was a cross between a PBX and a Key System. The distinction between the KTSs and PBXs became more blurred as technology brought more intelligence to the KTS. Further blurring the trend between Key Systems and PBXs was the propensity of some manufacturers to make Key Telephone instrument lines compatible with PBX lines, allowing a company to grow out of its KTS and into a larger more sophisticated PBX.

Private Branch Exchanges. In the early 200s, many organizations operated private telecommunications systems. These systems ranged in size from the federal telephone system, which was larger than the telecommunications systems in many countries, to small private branch exchanges (PBXs). Nearly every business with more than 30 to 100 stations was in the market for a PBX or its central office counterpart, Centrex. PBXs were economical for some very small businesses in need of features that most key systems did not provide, such as restriction and least cost routing. They were also economical for very large businesses that had PBXs using central office switching systems of a size that rivals many metropolitan public networks. Most PBXs could be mounted in a cabinet on the business user's premises and could operate without air conditioning in an ordinary office environment.

The office PBX increasingly controlled private voice networks. As the network evolved into all digital, so did the PBX in all but the low end systems of 100 stations or fewer, which remain analog. The advent of the T-1 carrier as the preferred transmission medium was the principle force driving the evolution of the PBX. The long distance carriers made it increasingly attractive for business users to bypass the local central office with T-1 trunks directly to the long distance carrier's central office. The cost of T-1 service for PBX lines was particularly advantageous when data transmission facilities paralleled the route of voice. The integration of voice and data reduced the cost of access lines to the outside world.

Call/Voice Processing Equipment. Several converging forces had increased the importance of incoming call management systems. First, there was the increasing use of telemarketing. A telemarketing center typically had banks of 800-numbers with different numbers associated with different product lines or promotions and different agents with access to various databases to handle callers' questions. A caller distribution system was needed in this case to direct incoming calls to the appropriate agent. Second, most incoming 800-calls were delivered via T-1 technology. With this technology, calls needed to be routed to the appropriate party when they reached the customer premise. Finally, call distribution technology had advanced to the point where it was basically a merger of telephone and computer operations. Any organization with more than a few answering positions found that the cost of some machine-controlled call distribution paid for itself quickly.

A uniform call distribution system (UCD), a standard feature of many PBXs, often significantly improved call handling. The stand-alone counterpart of a UCD was the call sequencer. This device might work with a PBX or key telephone system, or it might be connected directly to incoming lines. Unlike the UCD, a call sequencer did not direct calls, but it alerted agents to the presence of incoming calls. The most sophisticated device was an automatic call distributor (ACD), which could either stand alone or integrate with a PBX. An ACD directed calls to the least busy agent to equalize the workload. The ACD administrator typically had a video display terminal that presented call statistics in real time and had many management tools that monitored and improved service and measured agents' effectiveness. Any organization that had a large number of incoming calls targeted for service positions was a potential ACD user. This included departments that handled mail orders, literary delivery, inquiries, field service, credit, and collections.

Modems. Like other types of telecommunications equipment, modems became faster, cheaper, and smarter. The ready availability of inexpensive personal computers expanded the demand for modems, and in the early 2000s basically two types of modems existed in the market: dial-up modems and private line modems. Dial-up modems either plugged into a personal computer slot or were self-contained devices that plugged into the computer's serial port. Many of the modem's features were designed to emulate a telephone. These features included: dial tone recognition, automatic tone and pulse dialing, monitoring call progress tones such as busy and reorder, automatic answer, and call termination. These items were priced on a commodity type basis and used the public network for the transmission of information. Private line modems worked exclusively with voice and data private lines, and although they had the same functions as a dial-up modem, they were not as popular.

At the beginning of the twenty-first century, many data applications, by nature, were incapable of fully using a data circuit. Rather than flowing in a steady stream, data usually flowed in short bursts with idle periods intervening. To make use of this idle capacity, data multiplexers were employed to collect data from multiple stations and create a single, high-speed bit stream. Data multiplexers came in two types: time division multiplexers (TDM) and statistical multiplexers (statmux). In a TDM, each station was assigned a time slot, and the multiplexer collected data from each station in turn. If a station had no data to send, its time slot went unused. A statmux made use of the idle time periods in a data circuit by assigning time slots to pairs of stations according to the amount of traffic they had to send. The multiplexer collected data from the terminal and sent it to the distant end, with the address of the receiving terminal minimizing idle times between transactions.

Analog or frequency division multiplexers were also available to divide a voice channel into multiple segments for data transmission. Their primary use was to connect multiple, slow-speed data terminals over voice channels. A concentrator was similar to a multiplexer except that it was usually a single-ended device that connected directly to a host computer. The primary application for multiplexers was in data networks that used asynchronous terminals. Since many of these items could not be addressed and had no error correction capability, they were of limited use by themselves in remote locations. The multiplexer provided end-to-end error checking and correction and circuit sharing to support multiple terminals.

Facsimile Equipment. In the 1990s facsimile equipment (FAX) became an indispensable business machine essential to the every day transactions of most businesses. The FAX machine worked by scanning the printed page, encoding it, and transmitting a facsimile of the images in shades of black and white without identifying individual characters. Facsimile could convey both text and graphic information, source documents could be retransmitted without rekeying, and facsimile transmission was affected less by transmission errors than other types of data communication. Facsimile was also fast. Some facsimile machines doubled as printers and copiers.

Telephones. The market offered two categories of telephone sets: general purpose sets or corded phones and special purpose telephones, such as coin operated telephones. The price of general-purpose sets was often a clue to quality. Many inexpensive instruments provided poor transmission quality and failed when dropped. At the high end of the scale, price usually was a function of features or looks. Single-line phone sets were being replaced by feature phones with many more characteristics and capabilities than existing models. In the late 1990s, cordless telephones gained wide consumer acceptance with an estimated 40 percent household penetration in the United States. These instruments used a low-powered radio link between a base unit and the portable telephone. Answering machines were still popular home equipment, but technological innovation was replacing the traditional stand-alone telephone answering machine connected to a telephone with integrated telephone answering devices. These units included telephone-answering devices incorporated into every piece of communications equipment from basic telephones to cordless integrated answering telephone devices and personal computer systems.

Coin Telephones. The advent of the customer-owned coin operated telephone (COCOT) was another byproduct of divestiture that was confusing to many users. In the first few years following the dissolution of the Bell System, many private companies saw COCOTs as a potentially lucrative business. The companies that ventured into this market with less than adequate equipment, however, quickly discovered what the local exchange companies (LECs) had long understood: the risks and administrative costs of coin telephones were high, and the companies that entered this market without understanding the hazards could lose large amounts. The two major risks were fraud and vandalism.

Convergence. A major development at the end of the 1990s was the growing convergence of voice and data networks. Advances in technology, of which ISDN was the first evidence, created the possibility for voice traffic to be inexpensively carried over data networks. A standard voice network was circuit-switched, meaning a circuit was established and dedicated to the call as long as it lasts. A data network, on the other hand, was packet-switched, meaning the data were bundled into packets that were transmitted separately, which enabled the system to eliminate silence in the transmission and allowed great flexibility in routing the information. As a result, as many as five to eight simultaneous Internet Protocol (IP) connections could be established on every traditional telephone circuit. A major issue in sending voice over data in 1999 was the voice quality provided by the system, but rapid improvement had been made and was expected to continue. Furthermore, not all customers required the same voice quality.

Deploying one network to handle voice, data traffic, and Internet access had great appeal, although companies with an extensive pre-existing infrastructure did not rush to replace it. According to a 1999 study by Information Week Research, 72 percent of companies operated separate networks for voice, data, and video while 19 percent had a single network combining voice and data. Only nine percent had a fully converged network for voice, data, and video. However, 23 percent of the companies contacted for this study said they planned to use a single network for all three types of traffic within twelve months. A study by Phillips Group-InfoTech reported that nearly 90 percent of companies with multiple sites would begin switching to voice traffic using Internet Protocol over their local area networks (LANs). This report predicted an average growth in this segment of the industry of 138 percent each year for the five years after 1998, creating a $1.9 billion industry by 2004. The Yankee Group, another marketing research organization, was even more optimistic, projecting a voice- and fax-over IP services market of $3.6 billion in 2002.

Accompanying the convergence of voice and data was the development of alternatives to the traditional PBX, called PC-PBXs. Instead of using what in effect was a custom-built computer that required custom software and could only be used with specific peripheral equipment and enhancements, PC-PBXs were designed to be regular PC servers. This more open approach allowed for greater flexibility and potentially lower costs. One factor slowing this innovation was the pace of development of accepted standards. A greater problem was the issue of reliability. Telephone customers, especially business customers, were accustomed to "five nine" reliability, that is, 99.999 percent uptime. Such capability had been developed over decades of refinement of PBX technology, but the new PC-based alternatives had not yet reached that level. At the end of the 1990s, the new systems were being aimed at small and mid-sized organizations and branch offices of large organizations.

According to the Multimedia Association, a telecommunications industry trade group, nearly 70 million PBX lines were in use in 1998. During that year more than 7.5 million had been added, and more than $7.5 billion had been spent on new PBX systems, a clear indication that the PBX was far from dead. Nevertheless, according to a study by the marketing research firm Data-quest, 11,503 PC-PBX systems were shipped in 1998, and 20,941 were projected for 1999. That number was expected to more than triple by 2002.

Bandwidth. The phenomenal growth in the popularity and business importance of the Internet contributed greatly to the continually growing demand for bandwidth, that is, the volume of traffic carried at one time and the speed at which it was transmitted. New technologies had been developed that pushed ISDN, a technology never fully exploited in the United States, into the background. The most common type of access used by business at the end of the 1990s was called T1, which provided much greater bandwidth than ISDN, though at a much higher cost. A newer technology, which promised bandwidth equivalent to that of T1 but at a cost like that of ISDN or lower, was Digital Subscriber Line (DSL). A number of variants of DSL were being used in 1999, but set standards were being developed. ISDNs still remained for customers that were more than three miles from a telephone company's central office, beyond the range of DSL.

Current Conditions

In 2001, the Telecommunications Industry Association (TIA) valued the U.S. market for telecommunications equipment and software at $166.7 billion, down 2.8 percent from the previous year. Voice and data equipment accounted for most of this total ($98.0 billion), followed by network equipment and facilities ($41.0 billion), wireless capital expenditures ($19.5 billion), and wireless handsets ($8.2 billion). Of these categories, wireless capital expenditures (6.2 percent) and voice and data equipment (1.2 percent) achieved growth in 2001, while network equipment and supplies fell almost 14 percent and wireless handsets dropped more than 6 percent. Although not as broad in scope, Value Line's evaluation of the telecommunications equipment industry depicted how revenues within the industry were falling by the early 2000s. Value Line reported that, after climbing from $23.6 billion in 1999 to $27.9 billion in 2000, industry sales fell to $20.6 billion in 2001 and were estimated to fall to $17.0 billion in 2002 and $16.8 billion in 2003.

Although frequently discussed, by 2003 "convergence" had not blossomed as the industry first expected. In fact, some observers partially blamed the mad rush to develop Internet Protocol (IP)-based networks—designed to carry applications, data, and video, as well as traditional voice communications—for causing some of the industry's woes. While the leading uses for IP-based networks were data and long-distance voice services, Network World reported that such services represented only a small fraction of telecommunication services spending overall. In addition, the publication revealed that most companies were "sticking with their legacy data networks even as they see significant growth and promise in their Internet applications. This leaves the entire Internet industry—carriers, equipment providers and software vendors—facing a slower transition to IP services than was anticipated during the go-go years of the late 1990s."

According to Network World , along with audio, video, and data conferencing, unified messaging and instant messaging were among the leading six IP-based services by early 2003. The publication cited findings from Insight Research that projected sales of these services would rise from $695.0 million in 2002 to $11.4 billion by 2007. Because of slow adoption levels, spending on technology to send voice communications via IP, known within the industry as Internet telephony or VoIP, were estimated to fall from more than $8.1 billion in 2000 to $7.3 billion in 2002. However, CED purported that 2003 represented a critical year for such technology. Comcast was expected to launch consumer VoIP services in Philadelphia midway through the year. According to the publication, the success or failure of the Comcast initiative would impact whether or not VoIP flourished industry-wide in 2004.

Industry Leaders

Of the six leading telecommunications manufacturers in the world during the early 2000s, two were U.S. companies—Lucent and Cisco. A third, Canadian-owned Nortel Networks, did a significant share of business in the United States. The remaining three were European—Alcatel, Siemens, and Ericsson. Lucent and Nortel traditionally focused on equipment for telephone systems while Cisco was the giant of the enterprise network and Internet markets. The advancing convergence of voice and data networks, however, and the explosive growth of data transmission, led all these companies to develop products for the converged network, often by buying companies with the products or expertise it lacked.

Lucent Technologies Inc. traced its roots to the very beginning of the telecommunications industry as the manufacturing arm of first Western Union and then the Bell system. The R & D unit, Bell Laboratories, was credited with many technological advances, most importantly, the transistor; its inventors received the Nobel Prize in 1956 for this achievement. In 1996, AT&T spun Western Electric and Bell Labs off as Lucent Technologies. In 1998, Lucent's market value surpassed that of AT&T. In 2002 it reported revenue of $12.3 billion, down more than 42 percent from the previous year. Lucent recorded a net loss of $11.8 billion in 2002 and reduced its workforce by 39 percent.

Cisco Systems was the number one supplier of computer networking products, with the majority of the market for routers and network switches. It also was a growing force within the telephone industry. Its 2002 revenue was about $18.9 billion, down more than 15 percent from the previous year. In 2002, the company employed approximately 36,000 workers.

Nortel Networks began life as the manufacturing arm of Bell Canada, but by the 1950s a majority of its shares were owned by Western Electric, then a subsidiary of AT&T. Bell Canada purchased most of those shares when the U.S. Justice Department forced Western Electric to divest. Northern Electric, as it was named then, was wholly owned by Bell Canada until 1973. In 1976 it changed its name to Northern Telecom, and in the same year it introduced the first digital switch, which fired its growth into the 1980s. The company went through hard times in the early 1990s, including a loss of $900 million in 1993. In 1999 it changed its name to Nortel Networks. In 2002 sales fell almost 40 percent, reaching $10.6 billion. The company reported a net loss of $3.6 billion that year and reduced its workforce by more than 43 percent.

America and the World

Historically, the United States has been the leader in telecommunications equipment technology and innovation. This factor was due primarily to the monopoly that AT&T (the Bell System) had on the nation's telephone system for the first 100 years of its existence. The breakup of the Bell System in 1984 created a new playing field for telecommunication equipment manufacturers worldwide. Since telephone technology is not drastically different from computer technology, and many of the same components and techniques are used in both, the race to compete in this market became a global endeavor. This factor, coupled with the regulatory barriers harnessing the former Bell Operating Companies, resulted in the United States losing this 100-year advantage almost overnight.

Between 1983 and 1989, the United States export of telecommunication equipment increased at a compound annual rate of 15 percent. During this period, imports of telecommunication equipment grew by 30 percent. In 1989, the U.S. telecommunication equipment industry had a trade deficit of $2.7 billion, which improved 15 percent in 1990 to $2.4 billion. Low-technology terminal equipment (i.e., telephones) accounted for the largest component of foreign imports. Foreign producers in the Far East were able to capture this market through lower manufacturing costs. China, Malaysia, and Thailand contributed the most to this market. The U.S. Senate, in response to these developments, passed the Telecommunications Equipment Research and Manufacturing Act of 1991 in an attempt to make the market more competitive.

Although the United States was no longer the dominant manufacturer in the telecommunications equipment market as it had been at one time, it reestablished itself as an international force during the later 1990s. Despite an enormous overall trade deficit with Japan and other Far Eastern suppliers, the United States did not have a deficit in telecommunications gear. In 1998, U.S. exports of telecommunications equipment totaled $20.7 billion, a drop of one percent from 1997 levels. On the other hand, imports increased by 19 percent, to $17.9 billion. Canada and Mexico were the dominant trading partners for both imports and exports.

According to the TIA, in 2001 telecommunications equipment exports totaled $25.8 billion, down 7 percent from 2000. That year, Canada was the leading international market, although very strong gains were made in China (46 percent) and Hong Kong (94 percent). Electronic Business reported that exports continued to deteriorate in 2002. When compared to the same seven-month period in 2001, exports were down almost 25 percent in the first half of 2002, totaling $13.2 billion. According to the TIA, imports fell 9 percent in 2001, totaling $36.0 billion. Mexico surpassed Canada as the nation's leading international supplier that year. Electronic Business indicated that imports were down in the first seven months of 2002, totaling $16.2 billion.

Further Reading

Allen, Doug. "The State of Convergence." Network Magazine, 1 October, 2002.

Benson, Woody. "PBX's Demise Has Been Greatly Exaggerated." Business Communications Review, April 1999.

Brown, Dave. "Branch-Office: ISDN Routers." Network Computing, 19 October 1999.

Brown, Roger, Jeff Baumgartner, and Duffy Hayes. "The Broadband Forecast." CED, January 2003.

"Business: Out of the Ashes; American Telecoms." Economist, 12 October 2002.

CTI Futures Committee. "Vision: The Future of Computer-Telephony." Multi Media Telecommunications Association, March 1999. Available from http://www.mmta.org .

Delano, Daryl. "Global Economic Recovery Sluggish, Exports Suffer." Electronic Business, November 2002.

Duffy, Jim. "Cisco Bringing Convergence to Small Offices." Network World, 9 August 1999.

Henricks, Mark. "Selecting a Phone System." Office Systems, September 1999.

Jessup, Toby. "Porting the PBX." Data Communications, July 1999.

Korzeniowski, Paul. "PC-PBX Systems Build Momentum." Information Week, 8 November 1999.

LaBarba, Liane H. "Vendors See No Rebound as 2002 Outlook Worsens." Telephony, 29 April 2002.

Levitt, Jason. "DSL Comes Together." Information week, 26 April 1999.

Marsan, Carolyn Duffy. "IP Services Hot; IP Spending Not." Network World, 6 January 2003.

McNamara, Thomas F. and Khaled Nassoura. "Voice over Data." Consulting-Specifying Engineer, September 1999.

O'Connell, Brian. "IP Telephony over LAN a New Industry." Newsbytes News Network, 23 September 1999.

——. "New Comms Platforms Take Dead Aim at PBX." Newsbytes News Network, 3 August 1999.

Sulkin, Allan. "Changes Coming to PBX Technology." Business Communications Review, September 1999.

——. "PBX Alternatives: How Far Have They Come?" Business Communications Review, August 1999.

"Survey—Financial Times Telecoms—1 and 2: Quick Entry Rings Some Alarm Bells." Financial Times Surveys Edition, 30 September 1999.

"Telecommunications Equipment Industry." Value Line Investment Survey, 4 October 2002.

Telecommunications Industry Association. 2001 TIA Annual Report. 2001. Available from http://www.tiaonline.org .

Thyfault, Mary E. "Enterprise Networks—Merge Ahead." Information Week, 1 February 1999.

"Who Has the Winning Strategy?" Telecommunications Americas Edition, April 1999.



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