Last week, the Telecommunications Industry Association (TIA), which represents equipment vendors, released its annual "Telecommunications Market Review and Forecast," with a full range of data and projections for various international and domestic markets. TIA focused on markets such as wireless, VOIP, broadband and professional services, and offered projections that confirm trends we all see happening around us–namely, that the aforementioned segments are hot and will remain so through the end of the decade. And that the rest of the world, especially Asia/Pacific, will see the most dramatic growth.

But what caught my eye was the figures for data transport revenues. It won't surprise you to hear that TIA is projecting growth for IP-VPN services, and declining revenues for legacy technologies. But it might surprise you–it surprised me–to learn that TIA is still projecting that legacy technologies–leased line, ATM, frame relay–will still hold 73 percent of the market, in terms of revenue, in 2009 (down from 89 percent in 2004). In other words, TIA isn't projecting a tipping point for IP-VPNs, just steady shifting of the market.

That makes intuitive sense–there are few such dramatic tipping points–although we do continue to get reports of service providers moving pretty quickly to get customers off their legacy data WAN services.

But what I found even more unsettling was TIA's projection for overall growth in this market. The association forecasts the overall data transport market will grow from $27 billion in 2004 to $30.1 billion in 2009. That's just 11 percent over five years; the largest single-year growth TIA projects is 3 percent in 2005 over 2004; from there on, nothing above 2 percent.

That's great news for enterprises, in one sense. Certainly, as more businesses start using IP-VPNs, they can expect to save money, and probably get more bandwidth into the bargain.

But on the other hand, how much investment and focus are the carriers going to put into a segment of their business that's growing at less than 3 percent a year? Especially considering that, during the same time, they're spending billions to upgrade their last mile to fiber–so as to deliver entertainment content to consumers.

Of course, that's assuming the aggressive fiber buildouts go forward as planned. There have been some reports of investor discontent with Verizon's program for fiber to the home investment. The TIA figures on enterprise data services make it clear that the telcos have to do *something* to capture high-bandwidth residential market share. But it sounds like Ivan Seidenberg must be getting a sense for how Michael Armstrong felt when Armstrong engineered AT&T's purchase of major cable TV companies, only to face an investor revolt that forced a selloff of those assets. Armstrong was correct in his assessment that AT&T needed a broadband last mile, and if Wall Street had backed him up, AT&T might have survived as a company, not just a brand. Now Seidenberg finds investors questioning the wisdom of his massive last-mile investments.

Sooner or later, telco investors were going to have to bite the bullet. There is no quick fix for the telcos; to survive; they have to make these long term investments. And as they do, their focus may shift away from the enterprise. That's bad for enterprises, because you'll still be signing contracts and using those services–it'll just be harder to get service and support.