Despite the ongoing turmoil in the telecom market, voice still matters-to service providers, equipment and semiconductor suppliers, and consumers. Whether it's plain old telephone service (POTS), voice-over-broadband and voice-over-packet, or emerging technologies that integrate voice and data, voice represents an enormous market opportunity. Voice still accounts for more than 80 percent of carrier revenue streams and will continue to dominate revenues for the foreseeable future.

According to Legerity market models, the global market for POTS lines will grow by 72 million lines this year, 86 million lines in 2003 and 93 million lines in 2004. Legerity expects that the regional Bell operating companies will renew capital spending in 2003-2004, which will help jump-start component sales for the domestic telecom equipment market.

While Americans take lifeline voice service for granted, billions of people in other nations do not enjoy the benefits of basic POTS. China and India, in particular, represent high-growth markets for voice. The global public switched telephone network is evolving to become packet-based, and the evolution is occurring in pragmatic, capex-friendly steps. Voice-over-broadband (VoB) represents one of those steps. In-Stat/MDR has projected that the number of cable telephony subscribers worldwide will grow by 25 percent this year.

Whether carriers deploy VoB over copper twisted pair, coaxial cable or optical fiber, customer-premises equipment (CPE) still requires voice interface chip sets to provide POTS functionality over the broadband connection. The market for voice chip sets used in broadband CPE will thus continue to show strong growth domestically and internationally in 2002, with higher growth projected for 2003.

More than 40 percent of North American households are unable to receive broadband asymmetric digital subscriber line service because they are served by remote terminals (digital loop carriers) that are not DSL-capable. An emerging solution to this last-mile barrier is the deployment of integrated voice-data (IVD) "combo" line cards that combine lifeline POTS voice and full-rate ADSL data services over a twisted-pair connection to the premises.

IVD deployment is expected to ramp sharply in the second half of 2003, and the IVD market will explode in 2004.

The proposed FCC 02-42 regulation will reclassify DSL broadband services as an information source rather than a telecom service. Incumbent local-exchange carriers thus will be financially motivated to invest in ADSL deployment, which will help fuel the growth of the IVD and DSL markets in North America.